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Women on Boards The Forum of Executive Women Executive Suites Initiative Improving corporate governance. Increasing shareholder value. The time is NOW. Citizens Bank of Pennsylvania is proud to support The Forum of Executive Women in a variety of ways, including underwriting The Forum's Women on Boards report for 2004. At Citizens Bank, where women comprise 50 percent of our Leadership Team, we believe that diversity, in all of its many manifestations, results in different perspectives, new ideas, and stronger outcomes. In embracing its mission to support colleagues, customers, and community, Citizens Bank applauds The Forum for its leadership in advocating for the advancement of women in our region. About The Forum of Executive Women Founded in 1977, The Forum of Executive Women is a membership organization of 300 women of influence in Greater Philadelphia. Its members hold top positions in every major segment of the community — from finance to manufacturing, from government to healthcare, from not-for-profits to communications, from the professions to technology. As the region's premier women's organization, The Forum fulfills its mission — to advance women leaders in Greater Philadelphia — by supporting women in leadership roles, promoting parity in the corporate world, mentoring young women, and providing a forum for the exchange of views, contacts, and information. The Forum's Executive Suites Initiative advocates and facilitates the increased representation of women on boards and in top management positions of major public companies in our region. Irene H. Hannan, President Sharon Hardy, Executive Director A Four-Year Snapshot of Women On Boards % of women on boards 12% 10% 8% 6% 4% Executive 2% Summary 0% 2000 2001 2002 2003 Ensuring the Research is Current and Comparable Companies in the technology/telecommunications category have the fewest women represented in all levels of Revenues change from year to year. Therefore, the list corporate governance. At least half of the companies in of companies in the study changes. Data about the this category have no women board members, no women companies that have been tracked for at least two years executives, and no women c-level executives. were examined separately. The Consumer Goods, Financial Services, Healthcare, Manufacturing, and Utilities categories are similar in their Of the 118 companies in this year's study, 113 were also proportions of women on boards and in executive and in last year's study. Ten of them (9 percent) showed c-level positions. Between 20 and 30 percent have no changes in the representation of women on their boards women board members, 40 to 60 percent have no women — six increased the number of women and four decreased executives, and more than half have no women c-level the number of women. This represents a net gain of one executives. woman board member. More significantly, three (2.7 percent) of the 10 companies A National Coalition went from having no women board members in 2002 to The Forum has joined five other organizations across the having at least one woman board member in 2003. All country whose mission to increase women on corporate three of these companies are in the middle revenue boards and in executive suites is the same as The Forum's. categories, reflecting a trend seen in the overall data Like The Forum, each organization researches the top showing gains primarily in companies in the middle-level public companies in its region and publishes a report on revenue categories. women's representation in corporate governance. Our collaboration with these organizations allows us to Comparisons by Industry \compare results and to expand the depth and breadth of the pool of talented women available for board and Companies in the Life Science/Bio/Pharmacy category have senior-level executive positions. the highest percentage of women in all levels of corporate governance. This category is the only industry category in which every company has at least one woman Conclusion board member. It also has the lowest proportion of Despite mounting demand to improve corporate governance companies with no women executives and no women and increase shareholder value — and a growing environment c-level executives, and the highest representation, that has created incentives and opportunities to do so — a proportionally, of women holding 20 percent or more of rich, routinely overlooked, pool of accessible female talent both executive and c-level positions. remains untapped. There is a continued recognition of the strengths and talents of women in the population…we offer a different perspective…the ability to ask a question that people haven't thought of. –– Helen Bosley, Board member, South Jersey Industries 2 Women On Boards Call to Action A Confounding Contradiction In this new world of Sarbanes-Oxley, boards may Despite a multitude of incentives and opportunities to appoint women and minorities to the boards of the largest be more receptive to bringing women on boards…. publicly held companies in the Philadelphia region — and despite a rich talent pool from which to choose — The best talent is not restricted to males. progress has virtually stalled. ––Charles Biscieglia, Chairman of the Board, South Jersey Industries When companies avail themselves of all qualified A Large, Untapped Pool of Qualified Candidates candidates, not just some of them, this worrisome The 2002 Sarbanes-Oxley Act and other reforms require picture will change. board members to spend more time on compliance issues, making it more difficult for them to juggle multiple board The Business Case for Board Diversity assignments. As a result, many CEOs, the usual candidates of choice for board positions, are therefore accepting Better Bottom Line fewer positions as directors of other companies.4 And by Most pertinent to bottom-line-oriented boards is the fact putting a premium on financial expertise, Sarbanes-Oxley that there is new empirical evidence, which supports our and other reforms force boards to recruit finance and anecdotal evidence: Board diversity is associated with auditing executives, rather than predominantly CEOs, as improved financial outcomes.1 new members. In studying the relationship between board diversity and As a result, boards will have to broaden the pool of firm value in the Fortune 1000, The Eastern Finance potential board members and expand the talent base from Association found “an important association between firm which they recruit new members because the traditional performance and the presence of women on boards of source, the “old boys” network of CEOs, is dwindling and directors.”2 inadequate, while a significant pool of women with the talent and expertise to add value remains to be tapped. The report also found “statistically significant positive relationships between the presence of women or minorities Sarbanes-Oxley Imposes Governance Standards on the board and firm value” and concluded that “Overall, our results provide important evidence of a positive The 2002 Sarbanes-Oxley Act and other reforms, the relation between firm value and diversity on the board results of the high profile financial reporting scandals of directors.”3 among prominent companies, have set higher corporate governance standards. The reforms require that: a Because of their life and work experiences, women bring majority of board members be independent — that is, unique perspectives to the boardroom and different approaches without direct ties to the company; at least one member to the deliberation process. And these new perspectives and of the audit committee be a financial expert, usually fresh insights can lead to better decision-making. someone with CFO or audit-partner experience; independent audits be conducted; and financial reporting be more precise or, in the terminology of Sarbanes-Oxley, “transparent.” 1 The Financial Review 38 (2003) 33-35 2 Ibid, p.49 3 Ibid, p.51 4 The New York Times, “When Chiefs Decline to Serve on Other Boards,” June 20, 2004, p. BU 10 5 Financial Executive, “Changes Will Bring Women on Boards,” March/April 2004, pp. 32,35 The Forum of Executive Women 3 The only way to make a difference is to raise the level of consciousness of the people on the board…The current board members will talk about the talents that are valued…Find out what they are looking for…and then present a Call to person with those talents without focusing on the fact that she is a woman. Action ––Jane Scaccetti, Board member, Pep Boys There is a significant number of women who can bring Only three CEOs in the Philadelphia region's 118 largest financial expertise to the boardroom. Consider these facts: companies are women. Women in the United States… …comprised 13.2 percent of the partners at the top In addition, this insider mentality places heavy emphasis on accounting firms in 2003, up from less than personal referrals. The predominantly white men who are on 5 percent in 1992; the majority of boards too often favor people like themselves …comprise more than half of all auditors, account- and frequently claim they cannot find “qualified” women for ants, and financial managers; board membership and executive positions. Of course they …comprise 7.1 percent of the CFOs of the can! They are looking through a too-narrow lens, a lens that Fortune 500; clouds their view. …own over 10 million companies — almost half of all companies in the nation.5 Women also wield considerable economic power as What Needs to be Done consumers and investors and women board members The promotion of women to leadership positions has been show female shareholders, employees, and customers that painfully slow and companies can ill afford to wait patiently the company values their opinions and concerns. for the process to accelerate. The role of the CEO is key. Consider these facts: More than lip service, the culture of the company, informed Women in the United States… by the values and actions of the CEO, must value their …outnumber men in the population; abilities and contributions.

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