Between glass ceilings: Female non-executive directors in UK quoted companies

Abstract

The Higgs Review and the Tyson Report have drawn attention to board independence, the lack of female directors and the potential positive contribution of female participation to UK corporate governance. This paper examines the situation of female directors in the top 350 UK quoted companies in the context of recent debates about occupational gender differences and corporate governance. In particular, female non-executive directors account for just over 6 per cent of the non-executive directors and receive about two-thirds the remuneration of their male counterparts. Although female participation increases with firm size, the gender wage gap widens. More importantly, it was found that female nonexecutive directors are at a disadvantage in gaining promotions to positions such as chair of important board sub-committees (ie, the audit committee, the nomination committee and the remuneration committee) and as chairman of the board itself. Given that, in most companies, non-executive remuneration is related to the holding of such posts, this appears to be an important factor in explaining differences in non-executive remuneration. Exclusion of females from these powerful positions also suggests that women face a ‘second glass ceiling’ even after reaching board level. However, the latest version of the Combined Code on Corporate Governance now provides a valuable opportunity for UK company boards to address the issue of gender imbalance and independence on boards of directors.