Canada's securities regulators have published their fourth study showing key trends relating to gender diversity on public company boards of directors and in executive officer positions. The "Report on Fourth Staff Review of Disclosure Regarding Women on Boards and in Executive Officer Positions"1 tracks changes in gender diversity metrics between 2014 (when new disclosure rules were adopted) and 2018 for TSX-listed companies whose fiscal years ended between December 31, 2017 and March 31, 2018. As Canada's largest banks have fiscal year ends of October 31 they were excluded from the study, which skews the data somewhat as the banks have above-average numbers of women in leadership positions.
Progress is Being Made, but Slowly
Public companies have made progress in increasing gender diversity on their boards and in executive leadership.
- Two-thirds of companies have at least one woman on their boards, up from 49% in 2014.
- Between 2014 and 2018, the number of companies with three or more women on their boards increased from 8% to 13%.
- Targets at the board level are gaining momentum: the number of companies that have adopted targets for the representation of women on their boards has more than doubled from 7% in 2014 to 16% in 2018. Companies with targets tend to have more women on their boards: in 2018, there was an average of 24% female directors among companies with targets and an average of 13% female directors among companies without targets.
- More than one-third of companies have at least two female executive officers.
However, public companies are still far from achieving gender parity on their boards and in executive leadership.
- Women occupy only 15% of all board seats, up from 11% in 2014—a nominal annual increase.
- Only 29% of board vacancies were filled by women in 2018 (26% in 2017; prior years’ statistics were not gathered).
- One-third of companies have no women on their boards.
- Less than half of companies have adopted a policy relating to the representation of women on their boards. Companies with gender diversity policies tend to have more women on their boards: in 2018, there was an average of 20% female directors among companies with a board gender diversity policy and an average of 13% female directors among companies without a board gender diversity policy.
- Only 4% of companies have a female CEO and only 14% of companies have a female CFO.
- Targets at the senior management level remain unpopular—only 4% of companies have adopted targets for the representation of women in executive officer positions.
- More than one-third of companies have no female executive officers.
Companies included in the study were from 10 industry groups. Mining represented the largest group of companies (27%), followed by oil and gas (15%), financial services (10%), real estate (8%), manufacturing (7%), retail (6%), technology (6%), utilities (4%) and biotechnology (4%). Ten percent of companies fell into other industry groups.
The manufacturing, retail and utilities industries are leading the way at the board level with the highest percentage of companies (89%, 84% and 81%, respectively) with at least one woman on their boards. The oil and gas, mining and biotechnology industries have the lowest percentage of companies (56%, 56% and 59%, respectively) with at least one woman on their boards.
The manufacturing and real estate industries are the leaders at the senior management level with 80% of these companies having at least one woman in an executive officer position. The technology, mining and oil and gas industries have the lowest percentage of companies (52%, 53% and 56%, respectively) with at least one woman in an executive officer position.
Only 21% of companies have adopted term limits for directors—whether in the form of age limits or maximum tenure lengths, or both—to facilitate board renewal. The average tenure limit is 13 years and the average age limit is 74 years. The lack of popularity of term limits, combined with the fact that less than one-third of overall board vacancies are being filled by women, may be one of the root causes of the slow pace of progress between 2014 and 2018 towards achieving gender parity on boards of directors.
The securities regulators did not express any opinions in their 2018 statistical study about the extent of progress or lack thereof made by public companies in adding women to their leadership ranks. The regulators did indicate that they are considering whether to impose more onerous disclosure requirements and/or adopt best practice guidelines on gender diversity. No decisions have been made yet as to further regulatory action.
Related Corporate Law Developments
Canada Business Corporations Act
The CBCA was amended on May 1 to introduce gender diversity disclosure requirements that are aimed, in part, at greater alignment between the CBCA and Canadian securities laws. However, the necessary regulations to make the new requirements effective are still in draft form. The regulatory process can be lengthy and CBCA corporations are not likely to be required to comply with the new rules until at least the 2020 or 2021 meeting season.
The draft CBCA regulations impose diversity disclosure requirements under a "comply-or-explain" model consistent with securities laws. But while securities laws focus solely on the underrepresentation of women, the draft CBCA regulations require disclosure addressing enumerated categories derived from Canada's Employment Equity Act, namely women, visible minorities, Indigenous people and people with disabilities. Also in contrast to securities laws, the draft CBCA regulations do not contemplate any exemption for venture issuers. For more detail on the CBCA amendments, see our bulletin "CBCA Reforms Receive Royal Assent."
Ontario Business Corporations Act
Bill 101 Enhancing Shareholders' Rights is a private member’s bill under the OBCA still in the early stages of the legislative process and its likelihood of being passed is uncertain. Bill 101 would impose gender diversity disclosure requirements but the extent of alignment with securities laws or the CBCA amendments is as yet unknown because draft regulations have not yet been published.
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