Written By William Osler KC, Denise Bright, Angela Blake, Lisa Kakoske and Flutra Kacuri
The Canadian Securities Administrators (CSA) recently published its eighth annual Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (Year 8 Report) (the Review). The Review outlines the CSA's key findings from its review of public disclosure filed under National Instrument 58-101 Disclosure of Corporate Governance Practices by 625 issuers listed on the Toronto Stock Exchange with financial year ends between December 31, 2021, and March 31, 2022.
Board Seats and Executive Officer Positions
Women continue to make normal gains with respect to representation on boards of directors, holding 24 percent of total board seats, representing an increase of 2 percent from the prior year and 13 percent from 2015, being the first year that the CSA conducted a review of disclosure regarding women on boards and in executive officer positions. This increase is consistent with previous years, as the share of women on boards has increased by two to three percent annually since 2018. Eighty-seven percent of issuers now have at least one woman on their board and, of these, 30 percent have three or more. Seven percent of these boards have women as chairs.
As outlined in the Review, the percentage of board seats occupied by women has slowly but steadily increased for all issuers. However, issuers with higher market capitalization continue to have more women on their boards than those with lower market caps. For issuers with market caps over $10 billion, women occupy 33 percent of the board seats. In contrast, for issuers with market caps of less than $1 billion, women occupy only 18 percent of board seats. The difference in the representation of women on boards based on market capitalization is consistent with past years.
The number of women occupying executive officer positions has similarly increased. The Review reported that 70 percent of issuers now have at least one woman in an executive officer position. However, only five percent have a woman as Chief Executive Officer (no significant change from the Year 4 review, which was the first year statistics were collected).
Policies, Targets and Term Limits
According to the Review, 61 percent of issuers have adopted a written policy relating to the representation of women on their boards (an increase of 46 percent since 2015), while 39 percent have set targets regarding the same (an increase of 32 percent since 2015). Issuers with set targets and a written policy tended to have a more significant proportion of board seats held by women. In particular, women held an average of 30 percent of the board seats of issuers that adopted set board targets, compared to 20 percent for those that did not. Similarly, issuers that adopted a written policy had an average of 28 percent women on their boards, compared to 18 percent for those with no policy.
Term limits also impact the representation of women on boards. The Review reported that issuers that had adopted term limits had an average of 31 percent women on their boards, compared to 22 percent for those without term limits.
The manufacturing, real estate and utilities industries had the highest percentage of issuers with at least one woman on their boards. In contrast, the mining, oil and gas and biotechnology industries had the lowest. Still, the percentage of mining and oil and gas issuers with one or more women on their boards has doubled since the Year 1 review. The biotechnology sector has also experienced significant improvement—85 percent of biotechnology issuers now have one or more women on their boards, an increase of twenty-one percentage points from the Year 7 review.
The number of women in executive officer positions also varied by industry. The manufacturing, retail and utilities industries had the highest percentage of issuers with one or more women in executive officer positions. The mining, oil and gas and technology industries had the lowest percentage of issuers with one or more women in executive officer positions. This list remains unchanged from the previous year.
Guidance on Disclosure Practices
The CSA noted a recurring theme regarding disclosure practices—how issuers provide disclosure in response to disclosure requirements differs. As a result, the format and content of disclosure documents are inconsistent among issuers. In response, the CSA recommends presenting data related to disclosure requirements in a common tabular format so that disclosure by issuers is more easily identified and comparable by investors. The CSA refers to CSA Multilateral Staff Notice 58-313 Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (Year 7 Report) for guidance on this formatting method. We provided an overview of the CSA's recommendations in an earlier insight: CSA Publishes New Guidance on Disclosure of Women on Boards and Executive Officer Positions.
If you have any questions about the tabular disclosure format or other aspects of disclosure related to women on boards and executive officer positions, please contact any of the authors to discuss.