Independent review recommends FTSE 100 companies to have at least 33% of their executive pipeline positions filled by women by 2020

15 Nov, 2016

An independent review has been published which has called for FTSE 100 companies to have at least 33% of their executive pipeline positions filled by women by the end of 2020.

The report, The Hampton-Alexander Review (“the Review”), builds upon the work of Lord Davies who, in his final report into Women on Boards in October 2015, set a target of 33% representation of women on the Boards of FTSE 350 companies by 2020.

Whilst Lord Davies focused on increasing the representation of females on the Boards of FTSE 350 companies, the review extends the focus beyond the company boardroom to senior women below the company Board. As well as recommending that 33% of executive pipeline positions (the combined Executive Committee and Direct Reports to the Executive Committee) for FTSE 100 companies are filled by women, the review will also “continue to drive forward” the momentum of the Davies review and seek 33% female representation on the Boards of FTSE 350 companies by 2020.

Research has indicates that 25.1% of those currently sitting on FTSE 100 Executive Committees, and their Direct Reports are women. There was stronger representation of women in the Direct Reports at 26% women, but less strong on the Executive Committees with only 18.7% of women. Only 20 of the FTSE 100 currently have at least one third of their executive pipeline made up of women so there is “still more work to do” to achieve the targets set in the review. Significantly, there are 12 FTSE 100 Executive Committees with no women on them.

The review makes a number of recommendations including:

Women on Boards – FTSE 350 companies should aim for a minimum of 33% women’s representation on their Boards by 2020;
FTSE Women Leaders:
- Call to action All CEOs of FTSE 350 companies should take action to improve the under-representation of women on the Executive Committee and in the layer immediately below, the Direct Reports to the Executive Committee.
- Target representation - There should be 33% of executive pipeline positions for FTSE 100 companies are filled by women.
- Transparency – FTSE 350 companies should voluntarily publish details on the number of women on the Executive Committee and in the Direct Reports to the Executive Committee on an annual basis. The report recommends that this information is disclosed in the Corporate Governance Section of the Annual Report and Accounts and/or on websites.
Government reporting requirements:
- The Financial Reporting Council (FRC) should amend the UK Corporate Governance Code so that all FTSE 350 listed companies disclose in their Annual Report and Accounts the gender balance on the Executive Committee and Direct Reports to the Executive Committee. The FRC indicates (link to FRC website) that it “stand[s] ready to revise the UK Corporate Governance Code” following the Government consultation”.
- The Department for Business, Energy and Industrial Strategy (BEIS) should look to clarify or support the definition of “senior managers” (for the purposes of disclosure of the gender balance in the Strategic Report) in legislation to allow clearer comparisons on gender diversity to be made by companies.

There are also recommendations for investors and executive search firms. Although the target for 33% representation is only for the FTSE 100 at this stage, all recommendations of the review are focused on the FTSE 350.

Whilst the focus of the review is on the executive pipeline, it also reports on the progress on the representation of women on Boards of the FTSE 350 at as October 2016. Findings indicate that “the pace of increase on Women on Boards has slowed in the past 12 months, particularly in the FTSE 100. Findings indicate that:

The percentage of female-held directorships on FTSE 100 Boards has marginally increased to 26.6% from 26.1% in Lord Davies’ final report.
The percentage of female-held directorships on FTSE 250 Boards has increased to 21.1% from 19.6% % in Lord Davies’ final report.

The report indicates that “there may be a degree of complacency with the FTSE 100 having reached the 25% target in 2015 and taking time to gear up to the new 33% target”.

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