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Corporate Governance and Gender Diversity

Corporate Governance and Gender Diversity. Intervenant : Dominique de La Garanderie. Juin 2010. I. Figures of the female representation Goals of this document:

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Corporate Governance and Gender Diversity

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  1. Corporate Governance and Gender Diversity Intervenant :Dominique de La Garanderie Juin 2010

  2. I. Figures of the female representation Goals of this document: The main purpose of this document is to give precision on parity in the organs of societies direction in an international context but also to explain in what the situation could be ameliorated. to give the key elements on the presence of women in these organs; to identify the envisaged efforts to struggle against under female representation and to reduce the gender gap to indicate in what positive right and actual individual initiatives could be improved, on a plan so European as international.

  3. According to a recent study of the Women’s European Professional network, on 17 European countries, women occupy in 2008 only 9,7% (8,6% en 2006), seats of the boards of directors of 300 bigger European companies which count 15,1 members on average among whom 1,5 woman. France arrives only in twelfth position with 7,6% of women (6,4% in2004).

  4. Two European States nevertheless chose to fight against this invisibility of the women by a legislative system of quotae: The case of Spain: José Luis Zapatero made vote in March, 2007 for a law imposing from 2015 the presence at least 40 % of women in the boards of directors of big companies. The case of Norway: Norway is the first State to have opted for the legislative way to impose parity. Since February 1st, 2008, 500 highly-rated Norwegian companies have to count 40 % of women in their boards of directors. The penalty for disrespect of these measures is radical: the dissolution. Norway counted 7 % of women in boards of directors in 2003. It counts henceforth 44 %.

  5. The importance of the place of the women in the authorities of decision in Europe is very heterogeneous. Further to a study of the INSEE(NATIONAL INSTITUTE FOR STATISTICS AND ECONOMIC STUDIES) and Capitalcom, the situation in 300 bigger European companies was the following one in 2009:

  6. The French position: Further to a study of 2006 made by the French Institute of the Administrators (IFA) on the first 100 French companies (classification established by Le Point), we obtain the following distribution: Total Number of seats in boards of directors, Management Boards and supervisory boards: 1158 Number of executive administrators: 175 among whom 2,9 % of women Number of not executive administrators: 900 among whom 5,5 % of women Other (staff representatives, salaried shareholders): 84 among whom 19,3 % of women

  7. A more recent study on the first 500 French listed companies (Report Grésy on 2008) show again under representation of the women in the governance of company: • 8 % of the women in the boards of directors and surveillance; • 290 companies, that is 58 % have no women in their board of directors; These figures is to study in comparison with that of women administrative and commercial executives which is 41,2 %, women blocked by the glass ceiling. • 13,53 % of women in executive committees and executive committees; • 210 companies, that is 42 % have no woman in their executive or executive committee.Total Number of seats in boards of directors, Management Boards and supervisory boards: 1158

  8. A more detailed study of the companies of the CAC 40 leads to the same report in spite of a light improvement these last four years. • 2006: 44 women (8 % of the board of directors) • 2007: 52 women (8,5 % of the board of directors) • 2008: 57 women (10,2 % of the board of directors) • 2009: 58 women (10,5 % of the board of directors) • 2010: 65 women (11 % of the board of directors) In the detail: • 4 companies have no woman in their board of directors • 23 companies have 1 woman in their board of directors • 7 companies have 2 women in their board of directors • 4 companies have 3 women in their board of directors • 2 companies have 4 women in their board of directors

  9. This lack of coeducation is blatant when we examine in detail these figures by distinguishing in particular women's percentage in boards of directors and that in Executive Boards.

  10. II. The current regulation and its short-term evolution The legislative way: Currently, there is no legislative requirement regarding gender representation in the economic context. The issue of the gender gap is not new and the attempts launched to fulfil this gap are various and do not concerns only board of directors.

  11. We count essentially four laws joining this process: • The law N 83-635 of 13 July on 1983: It concern the implement of the equality treatment principle between women and men relating to the employment access, in the training and in the professional promotion, and the working conditions. It creates the obligation to produce an annual report on the situation compared by the men and the women in companies in employment and in training. It also creates the power for the companies to sign with unions affirmative action plans containing temporary measures of catching up in favour of the women, the plans presenting exemplary actions being able to benefit from a grant. • The law N 2001-397 of May 9th, 2001 – said law Génisson – plans: The report of compared situation includes indicators resting on calculated elements defined by decree. It also creates an obligation to negotiate on the professional equality at the level of the company and branches while making of this theme a transverse element of the compulsory negotiations (implementation of the politics of the integrated approach). • The law N 2001-1066 of November 16th, 2001 improves: Protection of the employees face to face discriminations. In particular by the arrangement of the burden of proof, obliging the employer to justify itself when the employee presents elements letting suppose the existence of a discrimination. • The last law in date N 2006-340 of March 23rd, 2006 is relative to the wage equality between the women and the men strengthened the obligation to negotiate on the professional equality by an obligation to negotiate measures of abolition of differences in compensation before December 31st, 2010.

  12. Women in board Concerning the law which imposed 20 % of women in board of director (2006). The Constitutional Council however censored the completeness of this title III in a decision n°2006-533 DC of March 16th, 2006: In the motives: the article 3 of the Constitution modified by the constitutional law of 1999 to facilitate the equal access of the men and the women to the electoral mandates and the elective offices applied exclusively to the elections in mandates and elective offices (that is to say the politic representation): “Considering that, if the search for a well-balanced access of the women and the men to the responsibilities others than the elective political functions is not against the constitutional requirements reminded above, she would not know how to, without underestimating them, making prevail the consideration of the sex over that of the capacities and the common utility; that, from then on, the Constitution does not allow that the composition of organs leaders or consultative of the moral persons of public or private law is governed by binding rules based. on the sex of the persons”. No comment

  13. The constitutional revision of 2008 drew the conclusions of this decision: The new 1st article of the Constitution plans henceforth that the law facilitates the equal access of the men and the women to the electoral mandates and the elective offices as well. As in the professional and social responsibilities. It concern without any doubt women representation in boards. The next law will not be censor by the Constitutional Concil. To assert the necessary search for an equal representation of the women and the men in the authorities of companies, in consideration of the very low representation of the women is henceforth an acquired principle. At the moment parliament is discussing on a proposal for 40 % women on boards.

  14. The self-regulation: In front of this situation, in April 2010, the MEDEF (employer’s representation) and the French association of companies (AFEP, CAC40 representation) integrated in their recommendations an enactment aimed at reinforce women presence in the first 120 French companies quoted on the stock exchange. (SBF 120). Each board will have to include 40% of administrators women within six years and respect an intermediate obligation of 20 % of administrators women for the deadline of two years.

  15. This new line of conduct is in the lineage of the report returned by Brigitte Grésy, member of the General Inspectorate of social affairs (made at request of Brice Hortefeux, home secretary). However this “recommendation" is accompanied with no penalty in case that it would not be respected. It is the rule “comply or explain” witch could be very efficient in the heat years and has been immediately applied when general assemblies and after this recommendations. It could be significant next year. Furthermore, French Institute of the Administrators (IFA) voted in March, 2009 for a resolution favorable to the institution of positive actions by the legislator.

  16. III. The questions of application In spite of the willingness of the MEDEF and the Afep, France envisages the institution of quotae by the legislative way. There is a consensus on the objectives to respect, Every actor of the economic life agreeing to improve the women representation but not all agreeing to establish an obligation of 40 % of administrators women in boards of surveillance and administration within six years. Establish an intermediate obligation of 20 % of administrators women for the deadline of two years.

  17. This proposition seems reasonable, the perfect parity being sharply too strict and unsuitable and the deadlines of 2 and 6 years being reasonable or even essential. However this proposition will be limited by several criteria: • The size of the company: the private bill aims at the companies of more than 1000 employees • The necessity of operating a distinction between board of directors or surveillance on one hand and executive committee or direction on the other hand • The first ones are organs defined by the law and governed by the corporate law, obeying an institutional logic and containing a shutter of general interest. • The second obey a contractual logic and containing a shutter of general interest. The second obey a contractual logic and it is not by the recommendation or law in discussion, but by law concerning equality treatment.

  18. Penalty We shall also note the concern to find the most adequate penalty. For reminder, Norway, which acts as model in the respect for the parity, had chosen the way of the autoregulation before any legislative approach. The autoregulation had ended in no result. It thus seems necessary to impose by the law of the measures of positive actions matched by penalty in case of breach to break the system of sociological complicity.

  19. A panel of penalties is possible: • The nullity of the deliberations of the badly consisted councils (major legal risk of insecurity) • The nullity of the appointments made in defiance of the requirement of coeducation (following the example of that sanctioning the non compliance with the rule of limitation of the multiple office-holding L.225-21 of the commercial law). That is the French legislative proposition. • The dissolution of the company (solution adopted by Norway but which radical and hardly enforceable). Attention on the perverse effects which the law could engender as for example a multiple office-holding important for the men as for the women thus not reflecting a real social coeducation.The size of the company: the private bill aims at the companies of more than 1000 employees

  20. IV. How to add it a capital gain on European plan For countries having adopted the recommendations, would not it should create an European observatory of the presence of the women in all the representative authorities in particular the boards of directors? An annual report would not only allow to measure the efforts by country but also to classify companies having their head office in the countries of the European Union: • By fixing a threshold of size of company either by the number of employee, Or by turnover, or by capitalisation ? • Or by holding only listed companies ? Hopping tone at the top. The European authorities could decide that the rule of “the most facilitated European woman” applies. So as regards the representation in boards of directors, the rule equals of the most favorable application in a country of the Union should be resumed in the other countries. « Utopia is the ambition that anticipates on a reality of justice. » Don’t you think so, you European Women lawyers ?

  21. Addendum After the setting up of this conference, results in France for the shareholders assembly concerning 2009 results have been published. Among the CAC 40's companies, 20 % of women in 12 groups (which means 30 % of CAC 40's groups). All in all, 18 groups have offered positions of board members directors to women, 5 times more than in 2009, 30 women have been accepted by cooptation. • Only 3 women had already an ongoing mandate, they have been accepted by cooptation for the 2010's Boards. • 12 women hold concurrently many mandates, the one who holds concurrently the most mandates holds 3 mandates. • 3 CAC 40's companies have not women yet. Therefore, there were 10.5 % of women in 2009 in Boards of CAC 40, there are 15 % in 2010. Among 576 positions, 88 are held by women.

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