Kathleen Taylor believes women’s “firsts” still matter.
Ms. Taylor will become the first woman to chair the board of a major chartered bank in January when she takes the helm at Royal Bank of Canada, becoming one of the most powerful female directors in Canada. She isn’t shying away from the focus on her gender, saying women face large enough barriers in business that it is still important to talk about “firsts” when they break through.
“I do think the discussion is important. Hopefully some day it won’t be something that is a discussion topic, because we will have made a lot of progress,” she said in an interview Wednesday at Royal Bank’s head office in Toronto. “But for the moment we still have work to do.”
The greatest significance of her appointment, she says, is the signal it sends to women who are bumping against the glass ceiling or are unwilling to even start climbing the ladder because they believe it will be too difficult.
“I’m a big believer in the need for leadership role-modelling on a whole variety of levels,” she said. “If people see it, they can understand they can do it. It’s a simple concept but a powerful one.”
The 56-year-old former chief executive officer of Four Seasons Hotels and Resorts Inc. has been a member of Royal Bank’s board since 2001 and has seen the bank increase the representation of women throughout its ranks. Her appointment to replace retiring chair David O’Brien comes after Royal Bank has expanded to have five women on its board out of 18 directors, giving women 28 per cent representation.
The number is significant given that women comprise only about 11 per cent of directors on the boards of companies in the S&P/TSX composite index, while 43 per cent of the firms had no women on their boards as of 2012.
Because “transparency is an enormous motivator for change,” Ms. Taylor says she supports a proposal by the Ontario Securities Commission to create a rule asking companies to disclose their approach to gender diversity for their boards and senior executives or else explain why they have opted not to do so. The OSC proposal is still out for public comment and no detailed rule has been developed yet.
“I think for companies to be called upon to explain how they think about diversity and how they work with diversity in their business is quite acceptable,” she says.
Indeed, Ms. Taylor says Royal Bank was an early signatory to the Catalyst Accord, promoted by women’s advocacy group Catalyst, making a voluntary pledge to aim for 25 per cent women on the board. As such, she says the bank has already committed to a minimum target for women, and she believes it would not be difficult if the OSC adopted a requirement for companies to disclose whether they have any firm gender diversity targets.
Ms. Taylor has spent the past three years heading the bank’s compensation committee, which oversees executive compensation decisions, and says she supports recent trends such as granting advisory say-on-pay votes to shareholders. But she is less convinced of the merits of a proposal tabled Wednesday by the U.S. Securities and Exchange Commission to require companies to disclose how the pay of their CEOs compares to the pay of their average workers.
She says the ratio may be measured differently across companies and could be hard to compare even among similar companies because they have different business models. Some Canadian banks have larger operations in lower-wage countries, for example, or may have larger lower-paid retail service employees or more higher-paid investment bankers.
“Even if you look at the six banks in Canada that you’d focus on most of the time, the differences in their business models are quite significant,” she says. “Understanding those differences and how they might play into this specific ratio will be important.”
She says income inequality is a key concern because of its potential broad impact on society and on the vibrancy of the economy. But she says it is not something a company like Royal Bank can easily tackle on its own. She rejects simple suggestions to unilaterally lower senior pay levels, saying the bank must compete in a global market for talent.
“All of these internationally focused financial institutions compete for talent with one another and also with other industries and other geographies. … I think it’s a bigger issue than simply one company saying ‘look, we’ll do it differently.’ Because the franchise is then at risk relative to what choices people might make.”