Didier Le Menestrel

Female Leading Roles

An historical casting took place in 2013: a number of women took some of the most sought-after positions of responsibility in the financial world. The eyes of investors all over the world are soon to be focused on Janet Yellen, at the head of the US Federal Reserve as well as on Danièle Nouy, designated as the future policeman for banks in the eurozone. In the private sector, we welcome the performance by Mary Barra, who was entrusted the keys to General Motors, and that of Inga Beale, chosen to take the reigns at Lloyd’s, a 300 year-old insurance group that admitted no women prior to 1972. From Christine Lagarde at the IMF to Marissa Mayer who managed to restore colours at the Yahoo group (1), the list of women in leading roles is constantly increasing.

A passing craze or a fundamental trend? The awarding of positions of responsibility to women is undoubtedly a lasting phenomenon. At this level of competition, competence is the only factor that prevails.

This movement to feminize “decision-makers” has been particularly visible within the governing bodies of major private companies. Women now occupy almost 24% of seats on the Boards of Directors of companies in the CAC 40, while growth has also been high at companies in the DAX 30, FTSE 100 and S&P 500 for which the Boards now include 17% of women. This feminine breakthrough is just as remarkable in terms of company Executive Committees, which now include women representatives for 7%, 5%, 11% and 13% of companies in these indices respectively. Only one citadel is still resisting: that of the very closed club of corporate heads. Only 24 women have managed to reach the highest level of one of the 670 companies in the major indices (CAC 40 + DAX 30 + FTSE 100 + S&P 500), vindicating a CV that is every bit as good as that of any male peer. In other words, these still exceptional ascensions are worth looking into. Does this feminine prize list reflect a simple concern for professional equity? Not only, judging by recent academic research from Harvard, Mc Kinsey and Crédit Suisse (2) which all conclude in the same way: a positive correlation exists between diversity in governing bodies and the financial performances of companies. After analysing almost 2,400 companies between 2005 and 2012, the Crédit Suisse study noted a 26% outperformance by those companies that had at least one female board member. This trend accentuated as of 2008 and tends to prove that diversity is even more welcome during crisis periods. However, this academic correlation is not necessarily synonymous with stockmarket performance. US company Pax took interest in this subject and its fund, the Pax World Global Women Equality Fund created in 2006, only invests in companies considered leaders in promoting women. However, the fund has had a fairly disappointing performance over five years compared with that of its benchmark index (+70% vs +101% for the MSCI World Index), and clearly dampens the enthusiasm of the most devoted defenders of the feminine cause on the stockmarket.

These results prompt us to rule out all dogmatism in the selection of corporate heads. The feminization of managing bodies is never simply a normalisation of professional life. It would therefore be absurd to revel in it excessively or to make it a fully-established investment criterion. Competence must remain the only factor to assess: these women managers are ultimately just people like any other men.

Didier Le Menestrel

(1) 157% gain between 17/07/2012 and 03/01/2014
(2) Harvard University – March 2013  Mc Kinsey – March 2012;  Credit Suisse Research Institute – August 2012