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Texas’ Corporate Boards Harbor Few Women


Call it the “Texas Stag Party.”

More than half of the boards of directors at Texas’ publicly traded companies lack even a single woman, according to a report by the corporate governance firm GMI Ratings. That figure—52 percent to be exact—represents the lowest share of female board representation for the 19 states with at least 50 public companies. Adding to the statistical significance: Texas is a corporate powerhouse. At last count, 266 public companies make their home in the Lone Star State, second only to California.

“To a certain degree,” says Melisa Denis, a partner in the Dallas office of the global accounting firm KPMG, “we’re still a good old boy society in Texas.”

Denis is founder of The Board Connection, a Dallas-Fort Worth nonprofit with the Herculean task of promoting gender diversity. In 2011, her organization found that only 10.6 percent of the corporate boards of Texas-based Fortune 500 companies, had at least one female director, compared with the Fortune 500 average of 15.8 percent.

The casual observer might reckon that the absence of female directors was related to the Lone Star State’s legendary macho culture. Texans famously love football, guns and hunting, tobacco-chewing and pick-up trucks among other totemically male pursuits. Yet Georgia, that stalwart state of the Old Confederacy, does far better than Texas in gender diversity, tying with Ohio at No. 2 on GMI’s list with 77 percent of its public companies’ boards having at least one woman. (For the record, Minnesota scores highest on the list with 85 percent of its boards having female membership.)

But the real culprit keeping so many directorships at Texas companies as testosterone-packed as a Dallas Cowboys’ locker room is the character of the state’s industries, principally energy. Nationally, 61 percent of publicly listed energy companies—105 of 172 U.S. companies traded on the stock exchanges—have men-only boardrooms. And from Beaumont to El Paso, GMI reports, 38 percent of all Texas companies, or nearly four in 10, are in the oil and gas or affiliated energy industries.

Texas’ corporate sector is also crowded with telecommunications (55 percent with no female directors) and information technology companies (49 percent with no women).

Among multi-billion-dollar, public companies with no female board member in the Texas energy industry are Cameron International (11-member board, all men), EOG Resources (7 men), Diamond Offshore Drilling (10 men), Pioneer Natural Resources (11 men) and Exco Resources (10 men). Telephone calls or e-mails seeking comment from these companies weren’t answered. An exception was Pioneer’s spokeswoman Linda Lawson who told the Observer, “We’ve had women on the board who did step down. It’s not as if Pioneer never had a woman on the board. It takes time to make changes.”

There is increasing evidence that companies’ hewing hard to the good-old-boy structure are putting themselves at a disadvantage. A 2011 report by the women’s business group Catalyst, for example, reports a strong correlation between higher stock performance and women’s board membership. Between 2004 and 2008, Fortune 500 companies in the quarter with the greatest percentage of female directors outperformed the quarter with the lowest percentage of women by 26 percent in return on invested capital and 16 percent return on sales.

Women’s growing economic power is also an argument for electing more female directors, notes Daniel F. Akerson, the CEO and chairman at automaker General Motors. In a “blue ribbon” report issued in October by the National Association of Corporate Directors, Akerson observes that women purchased at least 60 percent of all cars and trucks in the U.S. auto market and “influenced” $300 billion in sales and services in 2011. General Motors now has four women serving as directors.

“It’s critically important for companies to reflect changing consumer demographics in the U.S,” says Aditi Mohapatra, manager of strategic initiatives at Calvert Investments, a leader in sustainable and responsible investing. “But boardrooms have failed to live up to that same demographic shift.”

Shareholders are increasingly losing patience with companies that insist on boards that are, as one corporate governance expert says, “male, pale and stale.” Since 2004, Calvert Investments has filed shareholder resolutions seeking greater diversity with 10 Texas companies, including EOG in 2010 and Pioneer in 2012. (Most resolutions were withdrawn when the boards promised to take action, however slowly.)

California State Teachers Retirement System has a reputation for shareholder activism. Most recently, it was credited with playing a key role in the election of Facebook chief operating officer Sheryl Sandberg to the company’s all-male board. Aeisha Mastagni, an investment officer at the retirement system says: “Our beneficiaries, who are largely teachers, are predominantly female. We think the board members are there to represent shareholders as well as their company’s customer base.”

“One of the more interesting developments lately is [research] work showing that, with multiple women on the board, the nature of decision-making can change and become more collaborative,” says Donna Anderson, a vice-president and corporate-governance analyst at the giant Baltimore investment firm T. Rowe Price. Anderson says that during discussions with companies they urge them to put three or more women on their boards.

Sherron Watkins, the noted whistleblower at Enron who was named one of Time magazine’s three “Persons of the Year” in 2002 for her courage in exposing massive accounting fraud at the scandal-ridden, bankrupted Houston energy company, cites sociological research showing that there are clear differences in the way that men and women view the business world.

“Men are bigger risk-takers in the physical and financial arena,” says Watkins, who now lectures on corporate ethics and responsibility. “But women are bigger societal and moral risk-takers. Women tend to look out for the weaker members of society—for shareholders who are being manipulated or for that nameless victim who will feel the side-effects of a drug. Women are more willing to put their work lives in jeopardy.”

Houston-based Cameron International, which earned a corporate governance grade of “F” from GMI Ratings, might have profited from more voices on the board that pressed concerns about safety and health, the environment and regulatory compliance. GMI’s flunking grade largely stems from the thousands of lawsuits the energy-equipment manufacturer faces from its role in the 2010 Deepwater Horizon oil well blowout. Eleven workers lost their lives and several million barrels of oil spewed into the Gulf of Mexico in the country’s worst oil spill.

As the manufacturer of the “blowout preventer,” Cameron is contending with civil charges, including from oil well operator BP, that it produced a faulty device that “was flawed in design.” Cameron’s shareholders are also unhappy. According to SEC filings, they filed a separate lawsuit “alleging the company’s directors failed to exercise their fiduciary duties regarding the safety and efficacy of its products.” A Cameron spokeswoman dismissed a call from the Observer, saying “we don’t do media.”

The issue of gender diversity is roiling corporate waters worldwide. Norway and France now require public companies to have at least 40 percent representation for women on their supervisory boards. In the U.K., a February 2011, government report by Lord Mervyn Davies, a former trade commissioner, declared that women’s board representation of the iconic FTSE 100 companies— where 11 boards have no women—to be “shockingly” low.

“Corporate boards perform better when they include the best people who come from a range of perspectives and backgrounds,” declares Lord Davies’ report. “It is therefore imperative that boards are made up of competent high caliber individuals who together offer a mix of skills, experiences and background.”

Typically, companies that are reluctant to improve on diversity will assert that there are few board vacancies and that, when openings do arise, qualified women are in scant supply, particularly in the energy industry. Countering that excuse, California’s top two state pension funds have compiled a “Diverse Director Data Source” bulging with the names of 500 people. These potential directors “are not the usual suspects,” says Mastagni of the California teachers’ fund. “We think there is a whole pool of talent not being recognized.”

But it’s not uncommon to see aged directors occupying board positions into their late 70s and 80s. While director maturity and the wisdom of age can be a valuable asset in some industries, many companies are opting for a mandatory retirement age for directors. Pharmaceutical giant Johnson & Johnson, whose board charter has been cited by NACD for its best practices, requires departure at 72.

Boards with long-serving, aging directors may also be barely legal. The Sarbanes-Oxley Act of 2002 requires that the majority of directors be independent. But as GMI Ratings’ corporate governance expert Paul Hodgson observes, outsiders inevitably become insiders after 10 years of board service. The U.K., he notes, has codified that phenomenon: after serving a decade, the director loses his independent status.

NACD’s blue ribbon report commends diversity as a guard against “groupthink.” Consider the board configuration at EOG Resources, the Houston energy company (whose initials stand for Enron Oil & Gas, a spinoff from notorious Enron). Jack Wisner, 74, joined EOG’s board in 1997, and colleague 79-year-old George Alcorn has been a board member since 2000. The board also boasts director Leighton Steward, 77, a former geologist and global-warming skeptic who has written the book CO2 is Green and has publicized his notions championing carbon dioxide on Fox News and in congressional testimony.

During a recent visit to Austin, Lilly Ledbetter spoke to the Observer about male-heavy corporate boards. In 2009, Congress passed the Lilly Ledbetter Fair Pay Act to strengthen the principle of equal pay for equal work. Ledbetter told the Observer that things might have gone better for her at Goodyear—where she was systematically paid less than male counterparts in violation of the law—if there had been more women in senior executive positions as well as on the board of directors.

“Women should be more represented on [corporate] boards as well as in Congress,” she says. “A lot of major corporations are realizing that in order to provide the best services or products they need to recruit the best possible person, whether it’s women or men.

“There are no men’s jobs or women’s jobs,” she adds, “There are just jobs.”