Goldman Sachs’ CEO David Solomon made news at Davos last week by announcing that his firm would no longer help companies go public unless they had “at least one diverse board candidate, with a focus on women.” I knew women were underrepresented on IPO boards, but Solomon’s statement made me wonder exactly what the gender composition of IPO boards was like. So, I did a little digging, and now I’m kind of sorry that I asked.
Last May, a Quartz article looked at the gender diversity of the 10 biggest IPO filings of 2019. While it was early in the year, the list included Uber, Lyft, Pinterest, Slack, Chewy, WeWork & CrowdStrike – so the kind of unicorns that banks like Goldman court were all in the mix. The results were pretty dismal:
Of the 10 biggest companies that have gone public or filed to go public this year, none is led by a woman, and the average number of women on their boards is less than two. Excluding WeWork, which filed its registration confidentially, the average number of women on the list of the highest paid executives, disclosed in each company’s S-1 filing, is 0.56.
WeWork’s public filing disclosed one woman on the list of its highest paid executives, but it also didn’t have a single woman serving on its board. Uber and Lyft were the medalists in the group, with both companies having 3 women on their board. In terms of overall percentage of women board members, Pinterest topped the list with 2 women serving on its 6 member board.
This isn’t just a problem among tech unicorns. According to the Equilar report, in 2018, the 4 most popular IPO industry sectors all averaged fewer than 2 female board members. Tech & Consumer companies led the way with an average of approximately 1.3 women on their boards, while Financial companies averaged 1.0 women and Healthcare companies brought up the rear with an average of less than one woman per board. Healthcare’s not necessarily an outlier. A 2018 Equilar report said that only about 60% of recent IPOs had a woman on their boards.
It remains to be seen how scrupulously Goldman Sachs will stick to its pledge and whether any of its cohorts in the “bulge bracket” will follow its lead, but the numbers indicate that there’s a lot of work to be done. Check out the Cydney Posner blog for more on Goldman’s decision.
A Bloomberg Law analysis says that Goldman’s decision has the potential to cost it more than $100 million in underwriting fees – and that’s nearly 1/3rd of the fees that it earned from underwriting U.S. IPOs last year.
-John Jenkins, TheCorporateCounsel.net January 28, 2020
