Female CEOs Make Room for Female Directors

11/11/2014

During board meeting breaks, female directors of Avon Products Inc. use a women’s room right next to the boardroom. Directors needing the men’s room must trek to the other side of the senior executive floor at its Manhattan headquarters.

Though unintentional, the lavatory layout says plenty about Avon’s board: Women dominate. Led by Chief Executive Sheri McCoy, they occupy seven of the 11 seats.

Avon is unusual but not unique. Many U.S. companies run by women have multiple female directors—a rare bright spot amid the sluggish progress in board gender diversity.

About 54% of the 67 concerns in the Standard & Poor’s 1500 Index with a female CEO now have at least three women in the boardroom. That is a far higher proportion than the 15.5% of such firms led by a man, concludes an analysis for The Wall Street Journal by governance researchers at MSCI Inc. Women comprise 15.8% of S&P 1500 boards, up slightly from 12.5% in 2009, it found.

However, looking at the S&P 1500 boards as a whole, only six of them—or less than 1%, have a majority of women.

The tactics that female leaders use to expand women’s boardroom presence offer a blueprint for other CEOs. Several top women bosses say they play active roles in seeking female directors, insist on women-only slates or consider less conventional candidates.General Motors Co. , DuPont Co. , Hewlett-Packard Co. , International Business MachinesCorp. , PepsiCo Inc. and Xerox Corp. are some of the biggest women-led businesses with three or more female directors.

“It’s time to take a chance on women,” says Gracia C. Martore, chief of Gannett Co. , which named a fourth female director in July.

Big companies with three or more female directors achieved significantly better financial results than those with none between 2004 and 2008, according to a 2011 study by Catalyst, a nonprofit research group. Recent German and Australian studies also found positive financial impact from gender-diverse boards.

Compared with many of their male counterparts, “women CEOs are even more passionate about this agenda of getting more women on boards,” and so they take risks on up-and-comers, says Kim Van Der Zon, head of the U.S. board practice for recruiters Egon Zehnder. The search firm has handled numerous hunts for female directors of female-led companies in recent years.

HSN Inc. Chief Executive Mindy Grossman typifies the trend. Three of her nine fellow directors are women—along with roughly 80% of customers of the retailer, known for its home-shopping network.