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Boards Becoming More Gender-Diverse, but Not Yet Balanced

Boards Becoming More Gender-Diverse, but Not Yet Balanced

Jeremy Glaser: For Morningstar, I’m Jeremy Glaser. There’s been increasing interest from both investors and regulators of having more gender diversity on corporate boards. I’m joined today by Madison Sargis. She is an associate director on the quantitative research team here at Morningstar. We are going to look at how much progress is being made here.

Madison, thanks for joining me.

Madison Sargis: Thanks for having me.

Glaser: I want to start by just talking about the growth in representation on corporate boards. What has happened over the last, say, five or 10 years?

Sargis: Gender diversity on corporate boards has definitely been improving. Across the Russell 3000, women hold 16% of all companies' board positions.

Glaser: But that's not necessarily evenly distributed. When you dive under the hood a little bit, what do you see in terms of who is doing better and who is doing worse here?

Sargis: It's definitely dependent on how big the company is. And so, the S&P 500, the S&P 100 definitely has a lot more women on their boards. But, however, as you go down the market cap, that gender diversity that you see starts to go away. Actually, the Russell 3000 is a lot less gender-diverse than the S&P 500.

Glaser: One of the interesting findings of the report is that women tend to serve on more boards than their male counterparts. What do you think is driving that?

Sargis: I think it's an availability pool issue--that there's a lot of attention to get more gender diversity on boards. But when you look at it, there's only so many women who have become senior executives or have been on boards before and these are the types of requirements to be on corporate boards. And so, there's just a smaller pool of women who can fill these seats.

Glaser: If you care about this issue and want to see more women on boards, what would be some of your recommendations to solve that availability issue?

Sargis: There's a couple of different philosophies. One of them is--what the state of California did--was regulate it, and now is requiring in 2019 to have companies headquartered there have quotas for women based on the size of the boards. There's other schools of thought--that thinking that this is due to board tenure and that there's not a ton of turnover of board positions. If we limited board tenure, then that would pave the way for more positions, which would lead to more women on the boards.

Glaser: Madison, I appreciate your thoughts on this paper today.

Sargis: Thank you.

Glaser: For Morningstar, I’m Jeremy Glaser. Thanks for watching.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Authors

Madison Sargis

Head of Quantitative Research
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Madison Sargis is director of quantitative research, a unit of Morningstar, Inc. In this role, Sargis leads a team of quantitative researchers, data scientists, and research engineers, whose key objectives are to strengthen the firm's data and research. Her team develops innovative statistical models, such as the Morningstar Quantitative Rating.

Before assuming her current role, she was an associate director of quantitative research. Sargis joined Morningstar in 2014 as a product consultant and then worked as a client-services team lead before joining the quantitative research team in 2016 as an analyst.

Sargis was recognized as one of Fund Action's Rising Stars of the 2018 Mutual Fund Industry Awards and was nominated for Investment Week's International Investment Woman of the Year in 2018.

Sargis holds a bachelor's degree in mathematics from the University of California, Berkeley, where she graduated cum laude, and a Master of Business Administration from the University of Chicago Booth School of Business, where she graduated with honors. She also is the recipient of the University of Chicago Booth KPMG Scholarship and Leadership Award.

Jeremy Glaser

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Jeremy Glaser is a stock analyst covering hotel management companies and real estate investment trusts. He joined Morningstar in February 2006 after graduating with honors from the University of Chicago with a bachelor of arts in economics.

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