Friday, June 10, 2005

You Won’t Get Rich By Being on A Board??

This is the third time I have heard the statement, “You won’t get rich from being on a board of directors” from a woman on a public company board of directors at a major Fortune 500 firm.

It’s just a little hard to imagine anyone even suggesting that sort of thing to Vernon Jordan, perhaps one of the most prolific professional board members in history.

After some research into the shareholdings of women on boards of top California-based firms, we found that there’s some truth to the statement that WOMEN have not gained as much as they could in service on boards of directors. But, we should be advising them to be better negotiators – not advising them to accept what has happened in the past.

Women on boards have not negotiated, effectively or well, their share of the director compensation pie. Women under-own shares in the firms where they serve as directors. They underbid on their compensation just like their sisters underbid their total compensation package in middle management. Women don’t get what they could from the marketplace.

And it’s really heart-breaking to hear some of the best of the breed out there in the public speaking marketplace telling their younger, up-coming potential sisters on public boards of directors –- “you won’t get rich by being on a board.”

Not good mentoring, girls!

California women on boards of directors provide a good benchmark of how well women are doing negotiating shares from the companies where they serve on boards. One hundred and twenty-three women held 130 board seats in California in 2005. Four owned over 20 M shares –- all of those women were founders, co-founders, or spouses of founders. Five women owned between 1 and 10 million shares. Now, those were savvy negotiators!

But, 98 women owned an average of barely 62,000 shares in the companies where they serve. The median -– half owning more and half owning less -– was 21,700 shares. And 23 women owned ZERO shares on the companies on which they served.

Some women on boards are foils for their corporate collaborators. Consider the example of AIG, the huge insurance firm. Founded by C.V. Starr in 1919, AIG went public in 1969. Starr International was spun off in 1975 to handle the executive compensation investment portfolio. C.V. Starr and Co. and The Starr Foundation each were established to serve a separate investment objective with the profits channeled from AIG, the publicly-held corporation.

Hank Greenberg owned 46.5 M of AIG’s total shares (55.4 M), another 41.4 M shares in The Starr Foundation, plus 16.4% of C.V. Starr & Co. as its President & CEO. He owned another 8.3% as Director of Starr International.

In March of 2005, just before resigning his positions at AIG, Hank Greenburg conveyed 41.4 M shares in AIG to his wife Corinna Greenburg, and then reversed his decision in June.

Ellen Futter, as a director of AIG since 1999, owned only 22,000 shares. As President of the American Museum of Natural History, she was instrumental in channeling a $36.5 M gift (presumably a tax-deductable donation) from the Starr Foundation to the Museum from 1999-2001.

The only other female out of the total of 16 AIG board members was Ambassador Carla Anderson Hills who did at least did a little better with 44,000 shares in AIG. However, she’s been on their board since 1993.

At least now, proxy statements must publicly report both the shareholdings of each director plus the compensation of directors at each company. Armed with this new mandatory information, women potentially can do a much better job negotiating for what they deserve for their board service.

But the idea of women on boards of directors advising female prospects or board candidates to expect little or nothing for their contributions as a member of a board of directors is bad for women and bad for business.

Monday, June 6, 2005

And Another One Bites The Dust!

Five announced mergers, acquisitions or relocations involving California-based firms have a large potentially negative impact on the state’s women on boards of directors, moving a total of 10 women out of the talent pool of local directors. These 10 women serve on boards with a total director count of 48, or a female director share of 20.8%, compared to the state’s overall average of 12.0% of board seats held by women among the state’s 110 Fortune 1000 firms in 2005.

Are these firms the proverbial "canaries in the mine" warning of problems with California's business climate?

1. PacifiCare Health Systems (Cypress, Orange County, CA) is a health-care network service provider which will be acquired by United Health Group of Minnesota for $8.1 B.

PacifiCare is ranked #172 overall in the Fortune 1000 and #15 in CA, has gross revenues of $12,277 M reported in 2004, and 2 women out of 10 directors: Aida Alvarez and Linda Rosenstock.

2. Providian Financial Corp. (San Francisco, CA) credit-card company will be purchased by Washington Mutual (Seattle, WA) in a cash-and-stock deal valued at $6.45 billion.

Providian Financial is ranked #619 overall and #70 in CA, with gross revenues of $2,659.90 M, and 3 women out of 8 directors: Ruth M. Owades, Francesca R. De Luzuriaga and Jane A. Truelove.

3. Fluor (Aliso Viejo, Orange County, CA) is relocating to Dallas, TX; is ranked #241 overall and #26 in CA; gross revenues of $9,380.30 M; with 2 women out of 10 directors: Vilma Martinez and Suzanne H. Woolsey.

4. UNOCAL (El Segundo, CA) if it’s bought by Chevron Texaco keeps the company in CA; is ranked #268 overall and #29 in CA; gross 2004 revenues of $8,217 M, with 2 women out of 10 on board: Marina v. N. Whitman and Farrell P. McClean.

Chevron-Texaco (San Ramon, CA) ranked #6 overall and #1 in CA; gross 2004 revenues of $147,967 M, with 1 woman out of 10 on board: Carla A. Hills

5. Titan (San Diego, CA)is merging with New York-based L-3 Communications. Tital is #781 overall and #81 in CA; gross 2004 revenues of $2,062 M, and 1 woman out of 10 on board: Susan Golding

6. Computer Science Corporation (El Segundo, CA) is facing a takeover bid by Lockheed Martin Corporation (Bethesda, Md., military systems defense contractor) for their government-contract business, along with three private-equity firms -- Texas Pacific Group, Warburg Pincus, and Blackstone Group -- which are interested in CSC's less-valuable corporate-customer business.

While the jobs of 78,000 employees are at stake, there isn't a woman to be found among the 17 executive officers or directors of CSC.

Thursday, June 2, 2005

One More Argument for Equal Time

It is astounding to me how much ink has been spilled on the topic of one tiny research project led by the University of Zurich's Ernst Fehr, which tested “people” – actually 58 men -- who played an investment game.
    “Thirteen of 29 people who inhaled oxytocin handed over all of their cash to their human trustee vs. just six of 29 who inhaled a placebo. However, the effect disappeared when the human was replaced with a random number generator.”

    “Researchers, reporting in the London journal Nature, said that shows oxytocin boosts social interactions rather than merely making people more willing to take risks.”

In 2002, Dr. Laura Cousin Klein, a researcher at UCLA who is now Assistant Professor of Bio-Behavioral Health at Penn State University, found that the hormone oxytocin served as a unique stress response mechanism for women. She reported that "friendships between women are special" -- they are women's way of responding to and coping with stress. When females encounter stress, they release the hormone oxytocin which buffers the "fight or flight" reaction to stress and encourages women to "gather with other women, instead."

Dr. Klein reported 3 years ago on the fact that 90% of the stress research focused on males alone. Dr. Klein also reported that oxytocin had differential results for men within stressful situations because when men are stressed they pump out testosterone which masks the effects of oxytocin.

The Zurich boys didn’t even recognize the value of Dr. Klein’s research. They ignored the need to structure a research sample to INCLUDE women, and they ignored the need to control and test for different gender effects.

Now, women have to deal with this newly defined reality of oxytocin based only on a tiny sample testing how men gamble in the investment marketplace.

Clearly, another good example of why we need more women at the top in sciences.