Good morning, Broadsheet readers! Payments to moms improve babies’ brain function, investors like the sound of a Kohl’s takeover, and a finance executive gives a lame excuse for poor board diversity. Have a great Tuesday.
– Board of it. A warning to corporate leaders: If your board of directors is not yet at or near gender parity you should be prepared to explain why, and—pretty please—come up with a better answer than Lee Chang-ken.
The president of Cathay Financial Holdings told Bloomberg recently that the board of Taiwan’s largest financial company includes 12 men and one woman because he can’t find qualified female directors.
“We know we need to increase female board members, but we dare not do so if there are no right candidates,” he said. “The chairman told me to look for ideal female candidates for independent directors, but I can’t find any.”
Lee said his options are limited because many female candidates he would choose are often disqualified from sitting on Cathay’s board for two years or more because they’ve worked for companies Cathay conducts business with.
To be clear, other Taiwanese corporations have managed to scrounge up qualified women—a fair number of them, in fact. Sixteen percent of directors at other financial companies in the region are women—far too low a share but still better than Cathay’s 8%.
We used to hear Lee’s defense—also known as the pipeline problem—much more than we do now. That’s because the demand for greater diversity on boards—from institutional investors, lawmakers, investment banks, and exchanges—has forced companies to face facts: the problem is not the available pool of women candidates; the problem is the search process itself.
Under fire to add female directors, boards have tweaked their outdated criteria for directors. For instance, they’ve eased the expectation that directors have prior CEO experience. A 2019 PwC report found that 24% of new independent younger directors were current or former CEOs, compared to 37% of existing board members. Boards are also growing in size to add directors from more diverse demographics and backgrounds. And it seems boards’ current (mostly white, mostly male) directors are finally looking beyond their own (mostly white, mostly male) networks when they have to replace their peers, and —voila!—finding female directors and directors from non-white groups.
The process remains far from perfect. The share of female directors in the S&P 500 only hit 30% for the first time last May. But, at the very least, most boards recognize that substantive action is needed to increase diversity and that Lee’s “Welp, no women here” excuse isn’t gonna cut it.
Claire Zillman
[email protected]
@clairezillman
The Broadsheet, Fortune’s newsletter for and about the world’s most powerful women, is coauthored by Kristen Bellstrom, Emma Hinchliffe, and Claire Zillman. Today’s edition was curated by Emma Hinchliffe.
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