Every few weeks, Sue Riddell Rose gets a phone call asking if she’s interested in joining another corporate board.
An engineer by training, she’s chief executive officer of Perpetual Energy Inc., a corporate director and is well connected (her father, for starters, is Alberta oil patch billionaire Clay Riddell). She’s also, crucially, a woman at a time when the composition of Canadian boards are under scrutiny.
With about a month until new securities rules will require listed companies to disclose targets for leadership diversity, Canadian businesses are rushing to add female directors, especially in the resource sector. The fact that not many women have engineering experience doesn’t explain the dearth on energy boards, Riddell Rose says.
“There’s lots of people on the finance side that are female” who could be board members, Riddell Rose said in an interview in Toronto last week. “So I’m not sure why we’re not proportionately represented.”
Under the new rules, which come into effect at year-end in nine of 13 Canadian provinces and territories, companies will be required to disclose information including their policies on female representation on the board, consideration given to women when appointing senior executives and new directors, and targets for women on the board and in top positions.
“Boards are being questioned on where are you going for candidates?” said Carol Banducci, the chief financial officer at Canadian gold producer Iamgold Corp. Already a director at Thompson Creek Metals Co., she also has been approached about joining other boards.
“Companies are wanting to be more proactive than reactive,” Banducci said yesterday by phone. “People are looking for individuals with a particular competency, in my case on the finance side. I’ve seen it on the legal side, I’ve seen it on the governance side as well.”
Canadian firms have been increasing efforts to find female board directors since the Ontario Securities Commission first proposed the new rules in January, according to Sherry Cooper, chief economic council at marketing firm MDC Partners Inc. and the former chief economist at Bank of Montreal.
“There’s certainly been a lot of activity for the last year,” Cooper said by phone from Toronto. “I’ve had to turn down potential board appointments.”
Ground to Cover
There’s still a lot of ground to cover. While the Canadian government has said it’s seeking to increase the representation of women on boards to 30 percent within five years, the current figure is 11 percent, based on available data for 235 companies in the Standard & Poor’s/TSX Composite Index, Canada’s benchmark equity index. That compares with 18 percent for the S&P 500, according to data compiled by Bloomberg.
Among the S&P/TSX group, 91 companies don’t have any female directors, and only five have a woman as CEO, the data show.
Resource companies, as a group, are on the low end. The average percentage of women on boards is 7.3 percent in the S&P/TSX Materials Index, according to data compiled by Bloomberg. Among companies on the S&P/TSX Composite Index Energy Sector Index, the number is 6.2 percent. Across both groups there’s only one female CEO, the data show.
Cheryl Brandon, a partner at mining-focused private-equity group Waterton Global Resource Management, says she’s the only woman in the room “99 percent of the time” during business meetings. She doesn’t believe that’s because there’s a shortage of qualified candidates.
“I think the issue more stems from the process of how in the past public companies have approached their board,” she said in an interview yesterday. “There has been predominantly male-leadership networks, and they tend to choose candidates that are more like themselves.”
Slow board renewal also has hampered changes, according to Cooper. Directors can have long term limits, which means companies looking to add more women may need to wait or make some big changes soon.
One precedent is encouraging. Similar principles adopted in Australia in 2010 helped increase the proportion of female directors of companies in the S&P/ASX 200 index to 17 percent currently from about 8.2 percent, according to data compiled by Bloomberg.
Canadian companies already have added female directors this year. Yamana Gold Inc. appointed two women to its all-male board in September, while Vancouver-based Teck Resources Ltd. said last week it’s adding two more women to its board.
Osisko Gold Royalties Ltd., a Montreal-based royalty company, has appointed Francoise Bertrand to its board of directors, it said today in a statement.
“Female director candidates with a proven experience running a P&L, finance or accounting are in particularly high demand,” said Steve Chan, principal at Hugessen Consulting Inc. in Toronto, which advises boards on compensation. P&L refers to a profit-and-loss statement.
Even without the new rules, there’s a growing recognition that a diverse set of perspectives at the board table can add value, Chan said.
“People have it on their radar screen,” Riddell Rose said in the interview. “When you are looking at your slate of potential candidates to fill open positions on a board, you are seeking harder to make sure that you’re considering a broader range of options.”
–With assistance from Rebecca Penty in Calgary and Christopher Donville in Vancouver.