Getting on Board with Women on Boards Continues to be a Gradual Process, CSA Reports

The number of women on boards of Canadian public companies has steadily risen in recent years; however, the overall process of “getting on board” with the advancement of gender diversity remains a gradual one, as found by the Canadian Securities Administrators (CSA) in their recently published CSA Multilateral Staff Notice 58-312 Report on Sixth Staff Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (Notice). The Notice continues the review, for a sixth year, of “comply or explain” disclosure provided by non-venture public companies concerning the representation of women on boards and in executive positions, as set out in Form 58-101F1 Corporate Governance Disclosure (Form). For more information on the CSA’s previous sets of review, see our October 2019 Blakes Bulletin: Advancement of Women on Boards and in Executive Positions Remains a Work in Progress, CSA Reports.

SIXTH-YEAR REVIEW RESULTS

The Notice continues the review of the compliance with gender diversity disclosure requirements by 610 issuers with financial year-ends between December 31, 2019, and March 31, 2020 (thereby omitting large Canadian financial institutions with October 31 year-ends). As in prior years, incremental progress has been made in the representation of women on boards; however, the overall pace of change has remained slow. Meanwhile, the proportion of Chief Executive Officer, Chief Financial Officer and overall executive positions held by women has not seen an appreciable upward trend during the periods measured by the CSA. Nevertheless, the Notice otherwise found mostly positive developments compared to the findings of the fifth-year review:

• Overall percentage of board seats occupied by women increased from 17 per cent to 20 per cent as compared to the prior year (up from 11 per cent five years ago), increasing in all size categories of issuers, with the 41 largest issuers leading the way at 31 per cent (up from 27 per cent in the prior year and 21 per cent five years ago)

• 561 vacant board seats were filled during the year, with 30 per cent of the new directors being women (down from 33 per cent in the prior year)

• 21 per cent of issuers still did not have a woman on their boards, down from 27 per cent in the prior year (51 per cent five years ago)

• 6 per cent of issuers had a woman as the chair of the board (as compared to 5 per cent in the prior year)

• 65 per cent of issuers disclosed having at least one woman in an executive officer position, up from 64 per cent in the prior year (60 per cent five years ago, but 66 per cent two years ago), with five per cent of issuers having a female Chief Executive Officer (four per cent in each of the prior two years) and 15 per cent having a female Chief Financial Officer (also 15 per cent in the prior year and 14 per cent two years ago)

• 54 per cent of issuers disclosed they had adopted a policy relating to the identification and nomination of women directors, an increase of four per cent compared to 50 per cent in the prior year (15 per cent five years ago), and issuers with such a policy had a greater overall percentage of board seats occupied by women (23 per cent) as compared to issuers without such policies (15 per cent)

• 26 per cent of the issuers had targets for the representation of women on their boards, an increase from 22 per cent in the prior year (seven per cent five years ago)

• Issuers with board targets had, on average, female board representation of 26 per cent, compared to 17 per cent for issuers that did not have a target

CONCLUSION

Progress continues to be slow in the sixth year since the Form was amended to require gender diversity disclosures. While momentum may be building as investors continue to pressure issuers to, in particular, add more women to their boards, in connection with releasing the Notice, the CSA noted that it “has been considering its role in the broader diversity conversation and will continue to engage with issuers, investors and other stakeholders on this topic”.

See also our January 2021 Blakes Bulletin: 2021 Proxy Advisory Firm Voting Guidelines: Canadian Highlights for a summary of significant developments in proxy voting guidelines concerning gender diversity.

For further information, please contact:

Stacy McLean               416-863-4325
Matthew Merkley         416-863-3328
Kelsey Park                   416-863-3255

or any other member of our Corporate Governance group.