Hostname: page-component-cd9895bd7-mkpzs Total loading time: 0 Render date: 2024-12-26T02:08:36.656Z Has data issue: false hasContentIssue false
  • English
  • Français

Are Director Equity Policies Exclusionary?

Published online by Cambridge University Press:  23 January 2015

Catherine M. Daily  and
Dan R. Dalton
Get access Rights & Permissions [Opens in a new window]

Abstract:

This paper examines two recent trends relative to boards of directors’ compensation, and their potential incompatibility. There has been some progress in increasing board diversity, specifically the inclusion of women and minorities on boards. The increasing trend requiring directors to hold/purchase equity as a requirement of board membership may seriously compromise further improvements in diversifying boards. Also, an increasing number of companies compensate directors partially or fully in stock grants and options. These compensation policies may be exclusionary, especially for women and minorities, impacting the quality of boardroom discussions and decisions. This study systematically examines whether corporations requiring director equity are exclusionary toward women and minority directors. Contrary to being exclusionary, companies with director stock requirements and annual stock awards have greater representation by women and minorities on their board. Moreover, larger companies are both more likely to have such policies and have higher proportions of women and minorities on the board.

Type
Articles
Information
Business Ethics Quarterly , Volume 13 , Issue 4 , October 2003 , pp. 415 - 432
Copyright
Copyright © Society for Business Ethics 2003

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acoba, M. A. 1999. Insider trading jurisprudence after United States v. O’Hagan: A restatement (second) of torts 551(2) perspective.” Cornell Law Review 84: 1356–1417.Google Scholar
Aldrich, H. 1989. Networking among women entrepreneurs. In Women-owned businesses, ed. Hagan, O.Rivchun, C. and Sexton, D. (New York: Praeger): 103–132.Google Scholar
Bankowski, E. 1997. Ethics must come from the top down. Compensation & Benefits Review, 29(2): 25–26.Google Scholar
Berk, K. J., Bertsch, K. A., and Higgins, S. C.. 1997. Board practices 1997: The structure and compensation of boards of directors at S&P Super 1500 companies. Washington, D.C.: Investor Responsibility Research Center.Google Scholar
Browder, D. 1995. Shareholders are valuing diversity. Directors & Boards 19: 12–15.Google Scholar
Burke, R. J. 1997. Women on corporate boards of directors: A needed resource. Journal of Business Ethics 16: 909–915.Google Scholar
Carey, D. C., Elson, C. M., and England, J. D.. 1996. How should corporate directors be compensated? Directors & Boards 26: 1–12.Google Scholar
Catalyst. 1998. 1998 Census of women corporate officers and top earners. New York.Google Scholar
Cinar, E. M. 1999. The issue of insider trading in law and economics: Lessons for emerging markets in the world. Journal of Business Ethics 19: 345–354.Google Scholar
Coffey, B. S., and Wang, J.. 1998. Board diversity and managerial control as predictors of corporate social performance. Journal of Business Ethics 17: 1595–1603.CrossRefGoogle Scholar
Conlin, M., and Zellner, W.. 1999. Women in the boardroom. Business Week, September 25: 30.Google Scholar
Daily, C. M., Certo, S. T., and Dalton, D. R.. 1999a. A decade of corporate women: Some progress in the boardroom, none in the executive suite. Strategic Management Journal 20: 93–99.Google Scholar
Daily, C. M., Certo, S. T., and Dalton, D. R.. 1999b. Entrepreneurial ventures as an avenue to the top: Assessing the advancement of female CEOs and directors in the Inc. 100. Journal of Developmental Entrepreneurship 14: 19–32.Google Scholar
Daily, C. M., Certo, S. T., and Dalton, D. R.. 2000. The future of corporate women: progress toward the executive suite and the boardroom? In Women on Corporate Boards of Directors: International Challenges and Opportunities, ed. Burke, R. J. and Mattis, M. (Dordrecht, The Netherlands: Kluwer Academic Publishers): 11–23.Google Scholar
Daily, C. M., and Dalton, D. R.. 1992. Officer and director stock ownership and firm performance in the publicly traded small corporation. Journal of Business Strategies 9(2): 101–113.Google Scholar
Dalton, D. R., and Daily, C. M.. 2001. Director stock compensation: An invitation to a conspicuous conflict of interests? Business Ethics Quarterly 11: 89–108.Google Scholar
Dass, P., and Parker, B.. 1999. Strategies for managing human resource diversity: From resistance to learning. Academy of Management Executive 13(2): 68–80.Google Scholar
Daum, J. 1998. Women on board. Chief Executive 138: 40–43.Google Scholar
Directorship. 1999. Significant data for directors 1999: Board policies and governance trends. Greenwich.Google Scholar
Ellis, R. D. 1998. Equity derivatives, executive compensation, and agency costs. Houston Law Review 35: 399–451.Google Scholar
Elsass, P. M., and Graves, L. M.. 1997. Demographic diversity in decision-making groups: The experiences of women and people of color. Academy of Management Review 22: 946–973.Google Scholar
Elson, C. M. 1996. Director compensation and the management-captured board—The history of a symptom and a cure. Southern Methodist University Law Review 50: 127–174.Google Scholar
Eyring, A., and Stead, B. A.. 1998. Shattering the glass ceiling: Some successful corporate practices. Journal of Business Ethics 17: 245–251.Google Scholar
Fama, E. 1980. Agency problems and the theory of the firm. Journal of Political Economy 88: 975–990.Google Scholar
Fondas, N., and Sassalos, S.. 2000. A different voice in the boardroom: How the presence of women directors affects board influence over management. Global Focus 12(2): 13–22.Google Scholar
Franklin, B. H. 1996. Who really is worthy of alignment? Directors & Boards 20(3): 37–40.Google Scholar
Gibson, R. 1997. Tricon CEO makes potential directors a job offer they couldn’t refuse. Wall Street Journal, August 28: B10.Google Scholar
Grossman, W. and Hoskisson, R. E.. 1998. CEO pay at the crossroads of Wall Street and Main: Toward strategic design of executive compensation. Academy of Management Executive 12(1): 43–57.Google Scholar
Gumbinger, R. 1995. A contrarian view. Director’s Monthly (December): 13–15.Google Scholar
Hambrick, D. C., and Jackson, E. M.. 2000. Outside directors with a stake: The linchpin in improving governance. California Management Review 42(4): 108–127.Google Scholar
Hawley, J. P., and Williams, A. T.. 2000. The rise of fiduciary capitalism. Philadelphia: University of Pennsylvania Press.Google Scholar
Ibarra, H. 1993. Personal networks of women and minorities in management: A conceptual framework. Academy of Management Review 18: 56–87.Google Scholar
Investor Responsibility Research Center. 1999. Board practices, 1999: The structure and compensation of boards of directors at S&P super 1500 companies. Washington, D.C.Google Scholar
Jacobson, M. A. 1996. Interested director transactions and the (equivocal) effects of shareholder ratification. Delaware Journal of Corporate Law 21: 981–1025.Google Scholar
Jehn, K. A., Northcraft, G. B., and Neale, M. A.. 1999. Why differences make a difference: A field study of diversity, conflict, and performance in work groups. Administrative Science Quarterly 44: 741–763.Google Scholar
Jensen, M. C., and Meckling, W. H.. 1976. Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics 3: 305–350.Google Scholar
Kaback, H. 1996. The case for cash for directors. Directors & Boards (Spring): 14–24.Google Scholar
Langevoort, D. C. 1999. Rereading Cady, Roberts: The ideology and practice of insider trading regulation. Columbia Law Review 99: 1319–1344.Google Scholar
Leighton, D. S. R. 2000. Making boards work. In Women on Corporate Boards of Directors: International Challenges and Opportunities, ed. Burke, R. J. and Mattis, M. (Dordrecht, The Netherlands: Kluwer Academic Publishers): 253–261.Google Scholar
Lublin, J. S. 2001. Multiple seats of power. The Wall Street Journal (January 23): B1, B4.Google Scholar
Ma, Y. and Sun, H. L.. 1998. Where should the line be drawn on insider trading ethics? Journal of Business Ethics 17: 67–76.Google Scholar
Meyer, P. 1998. Board stock ownership: More, and more again. Directors and Boards 22(2): 55–60.Google Scholar
National Association of Corporate Directors. 1995. Report of the NACD Blue Ribbon Commission on Director Compensation: Purposes, principles, and best practices. Washington, D.C.Google Scholar
National Association of Corporate Directors and the Center for Board Leadership. 1999. 1999–2000 Public company survey. Washington, D.C.Google Scholar
National Association of Corporate Directors and Deloitte & Touche LLP. 1997. 1997 Corporate governance survey. Washington, D.C.Google Scholar
Oakley, J. G. 2000. Gender-based barriers to senior management positions. Journal of Business Ethics 27: 321–334.Google Scholar
Palmiter, A. R. 1989. Reshaping the corporate fiduciary model: A director’s duty of independence. Texas Law Review 67: 1351–1417.Google Scholar
Rachels, J. 1993. The elements of moral philosophy. New York: McGraw-Hill.Google Scholar
Richard, O. C. 2000. Racial diversity, business strategy, and firm performance: A resource-based view. Academy of Management Journal 43: 164–177.Google Scholar
Robinson, E., and Hickman, J.. 1999. The diversity elite. Fortune (July 19): 62–70.Google Scholar
Shleifer, A., and Vishny, R.. 1986. Greenmail, white knights, and shareholders’ interests. Rand Journal of Economics 17: 293–309.Google Scholar
Siciliano, J. I. 1996. The relationship of board member diversity to organizational performance. Journal of Business Ethics 15: 1313–1320.Google Scholar
Wagner, R. H., and Wagner, C. G.. 1997. Recent developments in executive, director, and employee stock compensation plans: New concerns for corporate directors. Stanford Journal of Law, Business & Finance 3: 5–29.Google Scholar
Ward, R. D. 1997. The 21st century corporate board. New York: John Wiley.Google Scholar
Watson, W. E., Kumar, K., and Michaelsen, L. K.. 1993. Cultural diversity’s impact on interaction process and performance. Academy of Management Journal 36: 590–602.Google Scholar
Werhane, P. H. 1999. Moral imagination and management decision-making. New York: Oxford University Press.Google Scholar
Westphal, J. D., and Milton, L. P.. 2000. How experience and network ties affect the influence of demographic minorities on corporate boards. Administrative Science Quarterly 45: 366–398.Google Scholar
Williams, K. Y., and O’Reilly, C. A. III. 1997. The complexity of diversity: A review of forty years of research. In Research on managing groups and teams, ed. Gruenfeld, D. and Neale, M. (Thousand Oaks, Calif.: Sage): 3–28.Google Scholar