Aug/Sept 2015

Full disclosure

Survey attempts to capture the effects of recent “comply or explain” legislation

By Alexandra Lopez-Pacheco

Early indicators diversity reporting chart

For the first time, most companies listed on Canadian exchanges were compelled last spring to either outline a policy for improving the gender imbalance on their boards of directors or explain why they were not making the effort.

The impacts of the change are already evident, according to a recent report from Torys LLP.

Entitled Women in the C-Suite: Can Securities Law Advance Gender Equality?, the survey reviewed 179 issuers including 31 mining companies that released proxy circulars by early May. Researchers at the law firm found that on average women represented only 10 per cent of the directors of the mining companies’ boards, although larger companies had closer to 15 per cent.

Out of all issuers surveyed, 56 per cent had adopted formal policies addressing the representation of women on the board. According to the survey, “The vast majority of issuers that have policies appear to have adopted them between the 2014 and 2015 meeting seasons.” Rima Ramchandani, one of the authors of the report and co-head of Torys Capital Markets Practice, explained that more than 90 per cent of the sample group did not publish a disclosure policy in 2014. While she admitted this is not definitive evidence, Ramchandani said their analysis interpreted silence as a strong indicator that the issuer did not have a policy in the prior year.

Of the miners surveyed, 68 per cent (21 companies) had established board gender diversity policies, but just 10 per cent (three companies) had set specific targets for women on boards.

Roughly half the mining companies surveyed cited merit-based selections as the most common reason for gender not being considered in board nominations. “I understand why people focus on merit because we all like to think [...] that we evaluate people on objective criteria of qualifications, but anybody who understands the issues realizes it’s much more nuanced than that,” said Ramchandani. “Despite most people’s best efforts, there is unconscious bias and opportunities are often based on who you know. When you have chronic under-representation of women, what’s implicit when you say you hire on merit is that women are not as qualified.”

“Research has shown boards perform best when they have diversity,” noted Carole Turcotte, a partner at legal firm Dentons Canada, who was appointed to the board of exploration company Lamêlée Iron Ore Ltd. earlier this year. “I think they have to look at what they are missing on their board and try to look at women who have the expertise they are lacking.”

Apart from regulatory changes, other initiatives have recently been launched to try to increase the number of women on boards. The non-profit International Women in Mining (WIM) Community kicked off a set of webinars in May, sponsored by PearTree Securities Inc., to target women who are familiar with the industry. The nine-session Women on Boards series is designed for women who have 10 or more years of professional experience and hope to join a board. It covers everything from governance education to development of useful career tools such as a business action plan and a board-ready resumé. The series will remain on WIM’s website after the last session is completed next January. The entire series costs $330, although the option of paying for individual sessions is also available.

“We wanted to create a program that was affordable for women and companies in mining, which these days don’t always have a lot of money,” said Barbara Dischinger, director of the International WIM Community. “Our next step is to develop a database of board-ready women.”

WIM is also considering ways to help mining companies ensure that their recruiting and promotions processes will grow the number of women in the senior-executive-to-board-director pipeline. “The problem is the number of women in [senior executive roles] in the mining industry is still super small,” said Dischinger.

While Turcotte said she could not speak on the impact of the new rules in statistical terms since few reports analyzing the data have yet to be released (Torys is continuing its review to include all the issuers and plans to use its findings for a round table in October), she said she believes that “certainly the fact they have to include it in their proxy circulars makes [them] reflect on the matter, which they didn’t have to in the past. I think it will eventually make them change their ways, but it might take them a bit longer than we would want. I believe it’s going to become an industry standard.”

Ramchandani concurred, pointing out that it took some years for the Ontario Securities Commission’s corporate governance comply or explain rules for independent directors to become an industry standard: “It’s still early days. It hasn’t even been a year yet.”

New legislation requires public disclosure of payments to governments

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