10 Dec 2019

Hampton-Alexander Review publishes latest report on improvements in female representation in senior leadership positions in FTSE 350 companies

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The Hampton-Alexander Review recently published its latest (2019) report which considered whether progress has been made in improving female representation in senior leadership positions in FTSE 350 companies.

In 2016, the Hampton-Alexander Review established five key recommendations to improve senior female representation. These included establishing a target of 33% of women in leadership positions of FTSE 350 companies by the end of 2020. The target covers the board and extends to the two leadership layers below the board to Executive Committees and their Direct Reports.

The 2019 Report shows that, encouragingly, there has been an increase in the number of women on FTSE 100, FTSE 250 and FTSE 350 boards. The number of women increased from:

  • FTSE 350:7% in 2018 to 30.6% this year.
  • FTSE 250: 9% in 2018 to 29.6% this year.
  • FTSE 100:2% in 2018 to 32.4% this year.

The report concluded that if progress continues, the 33% target for women on boards will be met by the end of 2020.

However, the 2019 Report noted that there was further progress to be made. In particular, companies were far off reaching the target for women in senior leadership roles below board level. It concluded that in FTSE 100, FTSE 250 and FTSE 350 companies, the appointment rate of women into senior leadership roles would need to be close to 50% next year (with half of available roles going to women and half going to men), for these companies to reach the target by the end of 2020. The 2019 Report also found that there had been only a marginal increase in women holding Chair, SID (senior independent director) or CEO roles. The 2019 Report demonstrates the renewed focus on the tangible steps companies are taking to improve representation, in this case on the “gender question”.

The issue has gained further attention as set out in Glass Lewis’ 2020 UK Proxy Paper Guidelines which provides an overview of the firm’s approach to governance and proxy research in the UK. In the 2020 Guidelines, the firm has said it will consider recommending against the chair of the nomination committee at any FTSE 350 board that has neither met the 33% gender diversity target set out by the Hampton-Alexander Review, nor disclosed any cogent explanation or plan to address the issue.

The “gender question” is part of the broader “representation question”, which also involves looking at other ways in which representation can be improved amongst those in senior positions at leading UK companies.

In particular, the Parker Review, published in October 2017 made several key recommendations to improve the ethnic and cultural diversity of UK companies. One of these was for each FTSE 100 board to have at least one director from an ethnic minority background by 2021 and for each FTSE 250 board to do the same by 2024. It found that, as at the end of June 2017, directors of colour who were UK citizens accounted for only 2% of the total director population and only 6 people of colour hold the position of Chair or CEO.

The 2018 annual update of the Parker Review found that 54 of the FTSE 100 boards do not have a single director from an ethnic minority background, up from 51 in 2017.

It will be interesting to see whether progress has been made when the next update to the Parker Review is published.

Nic Patmore, one of the Co-Chair’s for NOTICED, commented “It is great to see the issue of representation amongst senior leadership of leading UK companies receiving further attention. On the issue of gender representation, things seem to be moving in the right direction. That has been reinforced by the recent announcement that Glass Lewis will take a stand against companies who have not met the target set out in the Hampton-Alexander Review (or explained that they have a clear plan to address gender diversity). However, as the Hampton-Alexander Review’s 2019 annual update shows, there is significant further progress to be made. The same can certainly be said on the question of ethnic and cultural diversity amongst senior leaders of businesses in the UK. Hopefully, the next update to the Parker Review will show similar progress, which we can build upon as we move into 2020.

Dammy Sokale,Trainee Solicitor, Herbert Smith Freehills
Corinna Cherrie, Trainee Solicitor, Herbert Smith Freehills

 

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