Figure 1 illustrates the distribution of CEO compensation to company C-Suite compensation, which follows a relatively normal distribution.
Through data and analytics, investors now have an opportunity to direct greater capital to businesses that make a positive impact.
Published May 23, 2017
Studies show that having gender diversity in leadership positions correlates with increased profit and returns. Companies with just 30% women in the C-suite demonstrate a 15% increase in profitability compared to those with none. Likewise, companies with boards made up of at least 40% women demonstrate higher return on equity, higher return on capital and lower stock price volatility , especially compared to exclusively male boards.
However, today’s companies are still largely male-dominated.
“[E]vidence suggests that many women remain unable to achieve their goals… If these obstacles persist, we will squander the potential of many of our citizens and incur a substantial loss to the productive capacity of our economy.”
- Janet Yellen, Federal Reserve Chair
We All Can Succeed: 125 Years of Women’s Participation in the Economy
For instance, take the S&P1500 Index -- comprising the 1,500 largest companies that account for 90% of U.S. stock market capitalization:
How can we create change?
The first step is to understand the scope of the problem. Censible set out to create a way of evaluating companies on leadership gender diversity. To find the companies and funds with the strongest female leadership, we use a database of over:
- 50,000 global companies
- 12,000 ETFs
- 25,000 mutual funds
- corporate executive and board data covering over 40,000 companies
Censible believes such a comprehensive analysis provides not only more accurate ratings but also global perspective across all companies, both big and small. Armed with this data, investors can make more informed decisions with their money. Because let’s face it: when you buy a product or invest in a company, you are supporting that company and its practices.
Explore the rankings
Find out which companies rank the highest for female leadership.
See the best performing large companies for female leadership.
These companies don’t measure up for female leadership.
Looking for a fund to invest in? These are the best and worst performers for women in leadership.
Find ratings for some of the most popular funds - such as the S&P 500, Russell 1000 and more.
See how other socially responsible investing (SRI) and environmental, social and corporate governance (ESG) funds stack up.
For each company, we first compile an executive score and a corporate board score, and then combine them into an overall raw Women in Leadership score. The raw score is then normalized across the company’s peers and by geographic region to determine a Censible rating.
The executive score is calculated based on the percentage of women in a company’s C-suite and the importance of each C-Suite position. The C-suite executive roles included are:
- CTO (Chief Technology or Chief Medical Officer)
- General Counsel
- Human Resource Officer
The executive roles are weighted by relative importance; this weight is determined by finding the median ratio of each position’s compensation to total executive compensation across companies with greater than $1 billion market capitalization. Censible uses compensation ratios instead of absolute compensation amounts because this measure naturally adjusts for compensation currency and company size.
Figure 2 illustrates the distribution for CEO total compensation, which follows a skewed, heavy-tail distribution.
Censible also uses a system of equations to adjust position compensation weights when executives have multiple roles. In the event a company does not have a particular position or Censible is unable to identify an executive’s gender, Censible adjusts the score to avoid unfairly penalizing or promoting the company.
Corporate Board Score
The corporate board score is primarily determined by the percentage of women on the company’s board of directors. Companies close to all-male boards are given a penalty on their score and companies with over 50% women on their boards are given increasingly less benefit as board percentage approaches 70%.
Raw scores are normalized across company peers. Rather than defining peers according to strict industry and sector classifications, we analyze similarities in micro-revenue data to generate peer cliques to normalize across. This helps us avoid pitfalls associated with defining a conglomerate business by a single, narrow classification.
Censible also normalizes company scores based on country or geographic region. Regulatory requirements and cultural differences regarding gender roles can affect the inclusion of women in leadership roles. For instance, the CAC 40 in France is requiring large companies to appoint 40% of their board seats to women by 2018. Companies in countries with fewer than 75 companies are normalized against the companies in its geographic developed or emerging market region.
Company Rankings and Lists
Some companies are excluded from Censible’s published Women in Leadership rankings lists. To be included on a list, the company must meet the following requirements:
- Trade on a listed exchange
- Have at least four board seats and three known executives.
Companies failing to meet these requirements may still be used in ETF or mutual fund calculations. Censible aggregates companies for country-specific rankings by corporate domicile. For instance, Accenture PLC, which is domiciled in Ireland, would not appear on a U.S. aggregated list.
Censible builds its fund ratings by first evaluating the constituent companies found in investment funds and ETFs. Fund holdings level data is provided by Factset’s Ownership and Symbology datafeed. Censible breaks down each ETF and mutual fund into individual components at the positional level and then rolls them up into the ultimate parent company. For example, Vanguard's Total Stock Market ETF (VTI) holds approximately ten other investment funds which our proprietary analyzer programmatically disaggregates into roughly 3,500 individual companies in order to calculate an overall ESG score for the fund. Displayed metrics pertaining to a fund such as the number of companies in the fund or the number of female CEOs utilize Censible’s proprietary analyzer.
Fund Rankings and Lists
Some funds are excluded from Censible’s published Women in Leadership rankings based on our selection criteria. To be included, funds must meet the following requirements:
- Trade on a U.S. listed exchange
- Contain at least 25 company positions based on Censible’s disaggregation algorithm
- Do not have more than 10% exposure to a single company on a disaggregated basis
- The fund’s three largest company exposures collectively remain under 20%
- Legally filed or reported its holdings through Factset within the last year of the current date
- 70% of the fund is comprised of publicly listed companies
- Censible has rated at least 85% of the maximum potential fund exposure
- Funds have at least $75 million in assets under management. This requirement is removed for responsible investing fund lists
Press kit available upon request. Direct inquiries to Philip Martin.