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Are Director Equity Policies Exclusionary?

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  • Daily, Catherine M.
  • Dalton, Dan R.

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.

Suggested Citation

  • Daily, Catherine M. & Dalton, Dan R., 2003. "Are Director Equity Policies Exclusionary?," Business Ethics Quarterly, Cambridge University Press, vol. 13(4), pages 415-432, October.
    • Handle: RePEc:cup:buetqu:v:13:y:2003:i:04:p:415-432_00
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    Cited by:

    1. Jean Kabongo & Kiyoung Chang & Ying Li, 2013. "The Impact of Operational Diversity on Corporate Philanthropy: An Empirical Study of U.S. Companies," Journal of Business Ethics, Springer, vol. 116(1), pages 49-65, August.
    2. S. Certo & Catherine Dalton & Dan Dalton & Richard Lester, 2008. "Boards of Directors’ Self Interest: Expanding for Pay in Corporate Acquisitions?," Journal of Business Ethics, Springer, vol. 77(2), pages 219-230, January.
    3. Gro Mathisen & Torvald Ogaard & Einar Marnburg, 2013. "Women in the Boardroom: How Do Female Directors of Corporate Boards Perceive Boardroom Dynamics?," Journal of Business Ethics, Springer, vol. 116(1), pages 87-97, August.
    4. Seemantini Pathak & Codou Samba & Mengge Li, 2021. "Audit committee diversity and financial restatements," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 899-931, September.
    5. Clara Gallego-Sosa & Yakira Fernández-Torres & Milagros Gutiérrez-Fernández, 2020. "Does Gender Diversity Affect the Environmental Performance of Banks?," Sustainability, MDPI, vol. 12(23), pages 1-15, December.

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