Business, as the news reads these days, is a little like a game of snakes and ladders.
Change your job in the corner suite, and your compensation will vault you to the top, a lift that wondrously works even if you were sacked. Hunter Harrison pocketed a cool $49.2-million in 2012 to replace Fred Green as CEO at Canadian Pacific Railway, who was paid a (paltry) $8.8-million.
Conclude an $8.7-billion deal to acquire Bausch & Lomb, and your market capitalization surging over $29-billion will propel you over such TSX fixtures as Rogers Communications Inc., even if Valeant Pharmaceuticals International’s long-term debt of $18-billion could well pull the company down as if it were sliding on a slippery snake.
But in the business version of snakes and ladders, you can also move sideways at a snail-like pace. Canadian female executives know this all too well. On boards, they are on a losing streak, and this is no game. They have barely budged in recent years, which has widened the gap with their counterparts from the rest of the world.
In 2011, women only held 10.3 per cent of the board seats at the biggest publicly traded companies in Canada, a figure unchanged from the 2009 survey conducted by the research group Catalyst using the Financial Post 500 list. Canada is well behind the United States, South Africa and trails the United Kingdom, Germany and France. Worse, 40 per cent of the most important Canadian companies didn’t even have a single female director – companies such as Mega Brands or Reitmans, to name just two. You would think that a women’s retailer would find it useful to invite a woman on its board, especially one that has had a poor year.
Call it the glass ceiling or the sticky floor, as Quebec’s former finance minister Monique Jérôme-Forget likes to describe it, the results are just as depressing, and infuriating.
This is why many countries are using the legislative route to break up one of the last male strongholds that has held up with the pitiful excuse that there are not enough qualified and interested top-level female executives out there. There are, but if companies don’t look for them, they sure as hell won’t find them.
Ontario is the latest jurisdiction looking at new rules to hasten change. It is now working with the Ontario Securities Commission. As such, its initiatives could have a far-reaching effect, as the OSC regulates all companies whose shares trade in Ontario.
In comparison, Quebec is miles ahead with its diversity policy. It 2006, Jean Charest’s Liberal government enacted a law by which the boards of the province’s 22 state-owned corporations had to be equally represented by women and men within five years. By 2011, it claimed victory with 52.4 per cent of female directors over all, even if some institutions are not at the half-point mark. The Caisse de dépôt et placement du Québec, for instance, currently has five female directors on its 13-member board.
A working group of high-profile executives from Quebec Inc. also looked into legislating change in the private sector in the past year. But after debating the issue, it concluded in April that it wouldn’t impose by law more women on the boards of private sector companies, as Norway has. In 2003, the tiny Scandinavian country passed a law requiring that women hold at least 40 per cent of the seats of publicly traded companies.
Instead, Quebec’s working group stated ambitious objectives: Women should represent 40 per cent of all directors within 15 years. Unfortunately, the means to reach this goal are vague. The group concluded that companies should make public commitments, and stick to them.
Ontario’s approach, in comparison, looks more compelling. Its minister responsible for women’s issues, Laurel Broten, is eyeing a “comply and explain” scheme. Companies would have to disclose their goals and assess their progress annually. Should they fail to do so, they would have to explain themselves, presumably in front of their shareholders or the government.
This accountability is reminiscent of the transparency that is required of publicly traded companies regarding executive compensation. Companies have to explain how they determined the salaries and bonuses of their top executives. And many shareholders get a say on those policies, through non-binding advisory votes that are more common, even if they were still seen as heretical only a couple of years back. The fear of being symbolically booed has made some committees think twice before granting outlandish bonuses that are unrelated to the company’s performance.
Many female executives are uncomfortable with the idea of legislated quotas on boards, and rightly so. No qualified business executive wants to be seen as a token woman. But shaming companies into opening up their boys’ club is a different matter; on a board game, it would be the perfect snake.
Embarrassment is a powerful tool. It’s time to use it.