Corporate Heads: CEOs
At 92% of America’s largest companies, the boss is a man.
41 women run a Fortune 500 company in 2021. This marks a milestone for female CEOs of the Fortune 500. Fortune Magazine’s 2021 ranking lists 41 female CEOs out of the 500 CEOs of these key Fortune 500 corporations, or 8.1% overall. This is an all-time high, up from 2019’s 33 female CEOs, 2018’s 24 female CEOs, and even 2017’s 32.
41 out of 500 = 8.1%
Note: Women’s advancement group Catalyst charts the female CEOs of the S&P 500, which differ slightly from the Fortune 500.
Catalyst reports that as of Jan 2021, women held 30 out of the 500 top jobs in the S&P 500, or 6% of the total. (30 out of 500 = 6%)
The leadership of the Fortune 500 matters to a huge group of us. These 500 corporations represent fully two-thirds of total U.S. GDP. That’s $16 trillion in revenues, nearly $2 trillion in profits and $37 trillion in market value. As a group, the Fortune 500 employ nearly 30 million people globally.
Fortune Magazine further celebrates that Karen Lynch is CEO of #4-ranked CVS Health, the highest-ranking business ever headed by a woman – and the only female CEO in the top ten. Further, “for the first time two Black women are running Fortune 500 businesses” (Roz Brewer of # 16 Walgreens Boots Alliance and Thasunda Brown Duckett of #79 TIAA). 2021 continues an “upward trend of the last three years.” Fortune called 2019’s list “a drastic recovery from [2018] when the number had dropped to 24,” although the number of CEOs has been in the 20s since 2013.
(Note: When we wrote Power Failure in 1989, there were three female CEOs of the Business Week 1000 companies – all three of those women retired, and for many years in the 1990s, there were none.)
Fortune Associate Editor Emma Hinchliffe and Feature Editor Kristen Bellstrom provide insight about the women on the list. Many of these female CEOs are new to the job (e.g., Lauren Hobart of Dick’s Sporting Goods, new Coty CEO Sue Nabi, and Linda Rendle of Clorox, all of whom took over from a male CEO). Others have been leading their companies for years … and the company has just now landed on the coveted list. Bellstrom also points out that, while a few women have been hired externally, the majority have come up through the companies they now lead. Further, women are leading a wider variety of companies, compared to the consumer goods and retail sectors that have traditionally had more women near the top.
Speaking of “near the top,” Hinchliffe details a legion of reasons why “the number of women leaders at these companies stays so low.” Lower rates of promotion compared to men, “sexism, hostile work environments, conscious and unconscious bias, unequal pay, lack of paid leave policies,” and, notably, occupy high-level posts in areas such as human resources, legal, marketing, or finance, “that don’t directly lead to the top job.”
In 2021, women CEOs also include more women of color: Two black women – Roz Brewer moved from Starbucks to become CEO of Walgreens Boots Alliance, and Thasunda Brown Duckett was hired as CEO of TIAA from JPMorgan Chase. “Other women of color running Fortune 500 companies include Gap CEO Sonia Syngal, Advanced Micro Devices CEO Lisa Su, Yum China CEO Joey Wat, and Kewalramani of Vertex Pharmaceuticals.”
Even though the progress is worth celebrating, there are still more CEOs named ‘John’ or ‘David’ in the Fortune 500 than all the female CEOs combined.
Why does it matter that woman are so woefully represented, even as progress is being made? Bellstrom states, “The Fortune 500 is, at its heart, a reflection of what’s happening in Corporate America, particularly at the top tiers of Corporate America. So, when we see that female CEOs make up such a small percentage of the people leading these companies, it tells us something about the state of diversity and gender equality in companies everywhere.”
Hinchliffe adds, “The Fortune 500 controls more than $22 trillion in market value. So, for women’s priorities to be considered by American business, women need to have a seat at the table, making those decisions.”
In 2019, Bellstrom concludes, “One question that the small number of female CEOs raises is: Are corporate initiatives to improve gender equality and diversity at companies really working? I think this tells us that they may be making progress at the lower levels, or even the mid-levels, but when you get to the top, when you get to the corner office, we still have a very long way to go.”
Gender Diverse Boards are a Best Practice.
In 2019, Fortune interviewed Lorraine Hariton, CEO of Catalyst, to ask why we may have seen an increase of nine female CEOs in just one year’s time. Hariton and Fortune attribute this to Boards of Directors. Hariton identified that women held just 15.7% of all board seats fifteen years ago, while today they occupy 25.5%.
Women’s progress on Corporate Boards is due to several factors. (See the Power Percentage segment on Corporate Boards.) Among these: Some states have mandated increased diversity; Public corporations have added to the number of Board seats, and often filled them with women and POC; Institutional investors have pushed for greater diversity at the top, often citing research on the bottom-line benefits of diverse leadership.
Consider just one key example of benefits of diverse leadership: In general, female CEOs tend to have fewer months in the top job than their male counterparts (42 months vs 60 months -- This has sometimes been attributed to women being brought in at more challenging periods in a corporation’s life.). When corporations have “gender-diverse boards,” this correlates with female CEOs serving for longer tenures. Do gender diverse boards of directors hire more female CEOs? Support them through more challenging stretches, so that they remain in the top job longer? Create an atmosphere of governance that female CEOs prefer? At present, the correlation suggests that gender diverse boards are one avenue for increasing equity and diversity among American CEOs.
In considering the increase in female CEOs to 8.1% of the total in 2021, Hariton told Fortune, “We need to tell the optimistic—but not exuberant— story around what's happening for women … We're seeing more intentionality. We're seeing a focus on women of color. And we're seeing a recognition that diversity and women in leadership is even more important."
And what about the large, important corporations just beyond the Fortune 500? How do they fare in terms of gender at the top?
About the same.
A 2019 Pew Research Center’s analysis of the S&P 1500 FEC filings show that just 5.1% of chief executives were women, and few women are in the pipeline for the top job.Just 651 women out of 5700 executives (11.5%) work in the “pool of potential future CEO candidates,” those execs such as COO and CFO that report to the CEO and are in line, in terms of pay and position, to be in line for succession to the top job.Further, many of even these top women work in areas (such as legal or finance) less likely to be tapped for the chief exec role, which often comes through operations.
Women scarce in top corporate leadership ranks
% of chief executives and other top executives in the S&P Composite 1500 who are women
CEOs
Other top executives
PEW RESEARCH CENTER
According to a Pew Research Center of the eleven sectors that comprise the 1500 companies of the S&P Composite 1500 publicly traded mega-corporations, CEOs and other C-Suite top executives did not “make up even a fifth” of executives in any one of the sectors. In 2017, a survey of HR directors at major US corporations also found that women constituted “only 10% of the short-term CEO candidate pool” (that is, candidates who might be considered for CEO positions in the upcoming three-year time frame). The medium-term CEO candidate pool (3-5 years out) could not raise the percentage of possible female candidates higher than 15%.
What will it take for women to get into the Power Percentage of the Fortune 500 and/or the S&P 1500?