Presentation for a conference

“Reversing the Paradox - Promoting Gender Balanced Leadership”

27 May 2015, Dublin

Vitalijus Novikovas (JUST.D.1)

Promoting better gender balance

- - With its Strategy for Equality between Women and Men, the EC put the issue of women on boards high on the political agenda already in 2010.

- - In 2011 it called for credible self-regulation by companies to ensure better gender balance in companies’ supervisory boards.

• - One year later it became clear that progress was not visible, which is why in November 2012 the EC put forward a directive aiming to accelerate the progress

Representation of women on the boards of large listed companies in the EU, October 2003 – October 2014

Representation of women on the boards of large listed companies in the EU, October 2014

Change in the share of women on boards, EU-28, October 2010 – October 2014

• Most of the significant improvements took place in countries that have taken or considered legislative action or had an intensive public debate on the issue

Measures in European Countries

Quota laws:

•Norway - 40% by 2006•Iceland - 40% by 2013•France - 40% by 2017•Italy - 33,3% by 2015•Belgium - 33,3% by 2019•Germany - 30 % quota for largest companies

•Other measures:•UK – Lord Davies’ report – voluntary 25% FTSE100 by 2015•The Netherlands (30%) – non-binding target•Spain (2007) (40%) – non-binding target, no sanctions•DK- self-fixed quota

•Other countries – none or limited measures

The EC’s Proposal on Women on Boards(14/11/2012)

- The proposal sets a quantitative objective of a 40% presence of the under-represented sex among non-executive directors of listed companies by 2020 (or 33% among both types of directors – MS to decide). - Procedural requirement – is a key element of the Proposal: companies with a lower share are required to make appointments on the basis of a comparative analysis of the qualification of candidates by applying clear, gender neutral and unambiguous criteria. - This approach guarantees that qualification and merit remain the key criteria for a job on the board. - Only where two candidates are equally qualified, priority shall be given to the candidate of the underrepresented sex.

Executive directors

- Companies have to set individual targets for executive directors/ management board members

- Same deadline and reporting obligations, but not the procedural obligations related to appointments

Scope

- EU companies listed on EU stock exchanges

- Except: small and medium-sized companies (SMEs – less than 250 employees and annual turnover not exceeding EUR 50 million or annual balance sheet not exceeding EUR 43 million)

- Estimated ±5000 companies

- Privately or publicly owned

It is not a “one size fits all solution”(1)

- It offers considerable flexibility in choosing the means to achieve that progress.

- It is for each MS to define how it wishes to arrange that the selection for election or appointment to the posts of directors is to be carried out on the basis of a comparative assessment.

- The criteria for board positions are obviously to be established by the companies themselves.

- Relevant moment in the appointment procedure: determined by the Member States and/or companies (pre-selection, list composition, selection, etc.)

- Possible exemption for companies where the under-represented sex makes up less than 10% of the workforce.

- Flexibility clause: It allows for MS to have their own national measures aiming to improve gender balance, where these are as effective as the Commission has proposed.- Such MS can suspend the Directive’s procedural obligations. - No Commission pre-authorisation is needed – plausibility check and assessment of success - post factum, in individual reports.

- Temporary nature of the Directive – sunset clause (2028)

It is not a “one size fits all solution”(2)

Reporting and monitoring

Reporting by companies: - yearly and published on the company's website- both on executives and non-executives- explanation of the reasons and measures planned

Monitoring and reporting by Member States:- every two years- precise content requirements

Monitoring and reporting by the Commission:- 1st report - by 31 December 2021;- specific reports on use of flexibility clause by MSs

Sanctions

• - MS have to introduce effective, proportionate and dissuasive sanctions – for breaching the procedural obligations concerning the selection of board members and the reporting obligations

• - No sanctions apply for failing to reach the 40% (or 33%) objective if companies have properly applied these procedural obligations

Where we are now? Final remarks

• - This is one of the EC’s priority in the area of Justice and Gender Equality

• - In the EP there is broad cross-party support for the proposal

• - It is moving close towards a qualified majority in the Council of the EU

• - A widening gap between MS shows that an EU instrument is more necessary than ever

Thank you for your attention!

• For more information please see under the link:• http://ec.europa.eu/justice/gender-equality/gend

er-decision-making/index_en.htm

• Please do not hesitate to write an email to me in case of questions:

• Vitalijus.Novikovas@ec.europa.eu