Small U.S. companies slower to add female directors to their boards - study

U.S. corporations with market capitalizations of less than $2 billion (£1.56 billion) have been slower than larger companies to appoint more women to their boards of directors, according to an annual study from the National Association of Corporate Directors (NACD).

The percentage of women on the boards of small companies with market capitalizations from $300 million to $2 billion rose to 17% in 2019 from 13% in 2017. The percentage of women on the boards of companies in the Russell 3000, accounting for most of the U.S. stock market, rose to 19% from 15% over the same time period, according to the report, prepared by NACD with data provider Main Data Group.

Small companies "are bringing the overall average down," said Barton Edgerton, researcher at NACD.

Asset managers such as BlackRock Inc and proxy advisers, who make recommendations to smaller investors, have been pushing companies to add diversity to their boards by adding women. The largest companies, which are frequently in the spotlight, were the first to respond. Edgerton said bigger companies often have larger boards, making it easier for them to diversify.

"When we ask directors about the biggest barriers to growth and diversity, (what we have heard) consistently over the past several years is that there's no spots open and there's not enough turnover on the board," Edgerton said.

Companies with market capitalizations over $200 billion, of which there are few, have the largest percentage of female directors at roughly 27% this year, according to the study.

D'Anne Hurd, a director at companies including Eileen Fisher Inc, added that fewer women are on the boards of small corporations because they often grow out of venture capital and private equity firms, which are male dominated.

"Large firms have the budget to hire search firms," Hurd added by email. "CEOs of small companies, to save money, talk to their friends."

By Jessica DiNapoli