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On 16 June 2021, Women on Boards UK published a report that went beyond the FTSE 350, and examined the board diversity of the FTSE All-Share below the FTSE 350 (FTSE All-Share ex350). The report showed that despite the headline statistic that 31% of board members in the FTSE All-Share ex350 are women, there is much more to be tackled. Only 48% of companies have reached the 33% target for female representation on boards, more than half (54%) of the companies have all-male executive leadership teams and around two-thirds (67%) of companies have either one or no women on their boards. Of those companies that have either one or no women on their boards, 85% of those companies have one female board member.
The report looked at gender pay gap data reported by 163 FTSE 350 and 74 FTSE All-Share ex350 companies and noted that whilst the FTSE 350 companies show the largest average gender pay gaps (20.2%), the FTSE All-Share ex350 did not fare far behind, with a 17% gender pay gap in comparison to the national average of 13.7%. The FTSE 350 also showed a substantial bonus gap at 44.6%, in comparison to the FTSE All-Share ex350’s 36% and the national average of 20%.
The network found a wide discrepancy in the reporting of gender pay gaps. Companies appeared to file their data in a way that would enable them to dodge scrutiny. The legislation requires companies to publish their data in an easily accessible manner, but the network found that, of the FTSE All-Share ex350 that are required to report, 25% of these companies’ reports were hard to find, and often tucked away from expected locations on a company’s website. Additionally, transparency was low, with gaps in the data, as large entities often filed separate pay gap reports for each subsidiary and avoided reporting for subsidiaries not UK-domiciled and/or did not meet the 250 employee threshold. Some companies also chose not to provide year-on-year comparisons within their reports so readers could easily measure progress, and others appeared to hide previous reports from their website with only publication of their latest figures. A number of companies also appeared to not go beyond virtue signaling, with reports discussing their commitment to diversity and support for an initiative or charity but no discussion on efforts to reduce an often significant gender pay gap.
The report found that women are far less likely to take up executive positions at companies, the FTSE 350 ex350 is comprised of 16% female chairs, in comparison to the FTSE 350’s 11% and the AIM 50’s 4% (ie just two female chairs). The FTSE 350 has 8% of companies having all-male executive teams, but this increases greatly for the FTSE All-Share ex350, with over half not having a female presence in their senior executive leadership team. Where investment trust fund managers are excluded from calculations, there still remains 40% of FTSE All-Share ex350 companies having male exclusive senior executive leaders.
Diversity was poor on the ethnicity front too, with only 3% of board members of FTSE All-Share ex350 companies identifying as directors of colour, though this is similar to the low levels seen at the FTSE 350 (6.8%) and AIM 50 (4%). Women on Boards UK identified that alarmingly, only 17% of the directors of colour in the FTSE All-Share ex350 are black. The report noted that so long as companies rightly prioritise, progress can be quick, as seen by the increase from January 2020 to March 2021 where the number of FTSE 100 companies reporting having a director of colour increased from 52 to 81. Mirroring the divergence of attitudes to gender diversity, the approach to ethnic diversity was also widely varied, with companies such as PwC and Lloyds Bank reporting their ethnicity pay gap and 51 of the FTSE 350 not responding to the Parker Review 2020.
Women on Boards UK made the following recommendations:
Research has shown a correlation between board diversity and financial performance, and with the spotlight firmly on ESG, companies can no longer afford to ignore these issues. Companies are facing increasing pressure from investors to ensure that their boards are sufficiently diverse. This year’s AGM season has seen significant opposition from shareholders in regard to the re-election/election of directors where there has been a lack of progress. FTSE 350 companies such as Balfour Beatty plc, Ultra Electronics Holdings plc, EVRAZ plc and Ocado Group plc all acknowledged that a significant number of investors had voted against director appointment resolutions due to concerns around the lack of board diversity and the failure to meet the Hampton-Alexander recommendations.
Gender diversity remains a key issue that will be explored in our upcoming Market Tracker Trend Report, to be published later this year.
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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