Bill H.R. 4718: momentum forward?

• Author: Pinedo, Anna T.
• Position: BOARD DIVERSITY - Gender Diversity reports

In recent months, the call for regulatory intervention to promote gender diversity on U.S. boards of directors has gotten louder and become more urgent. The U.S. Government Accountability Office (GAO) published a report in December 2015 that analyzed gender diversity on U.S. corporate boards. In 2014, when the study data was collected, women comprised approximately half of the U.S. workforce, but only held approximately 16% of board seats of S&P 1500 companies. The report indicated that, based on current trends, it could take 10 years for women to comprise 30% of board positions and more than 40 years for representation of women to be equal to that of men.

Among other recommendations, the report suggested that in order to improve female board representation, the Securities and Exchange Commission amend its current regulations regarding disclosure of diversity statistics on corporate boards. The report notes that if reporting requirements were made more specific and disclosures regarding gender and racial diversity of board members were mandated, there would be more pressure on public companies to address board composition.

In early March 2016, a group of Democratic Congressmen wrote to SEC Chair Mary Jo White urging the SEC to take action to consider recommendations made by public pension fund fiduciaries to implement additional disclosure requirements in public company filings regarding board of director diversity.

Shortly following this letter, Congresswoman Carolyn Maloney introduced a bill, H.R. 4718, which would require the SEC to establish a Gender Diversity Advisory Group. The Group would be responsible for studying and making recommendations to the SEC on strategies to promote gender diversity on public company boards. The SEC would be required to deliver a report on the study within nine months of the Group's establishment.

Beginning one year after the delivery of the report, the SEC would be required to release an annual report on the status of board gender diversity. In addition, the bill would require that the SEC amend the Securities Exchange Act to require public companies to disclose the gender composition of their board. The bill has garnered support from the U.S. Chamber of Commerce as well as other industry groups.

The GAO report suggestions and the proposed legislation assume that, once provided with more detailed information, public company stakeholders will exert some influence in favor of increased diversity on...