Corporate governance at ArcelorMittal
- the challenge of increasing gender diversity
in senior management
17 October 2011 (Female Board Pool Luxembourg, 2nd edition)
Carole Wintersdorff, Senior Legal Counsel, Corporate & Securities
Law - ArcelorMittal
The challenge facing all companies today
• “Especially in today's economic tumult (…) human
capital is the whole game. The world's wealth
comes increasingly from companies that need little
physical capital but require tons of human talent,
knowledge, and creativity. Making judgments
about people is becoming the central
managerial skill”
Source: Fortune magazine (U.S.A.), September 2011
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Good intentions – and real life
• Davos World Economic Forum 2011: Female Quota Flops.
The Davos organizers had instructed the WEF's top 100 member
companies that at least 1 of their 5 delegates must be female. 20 of the
100 multinationals couldn't come up with a woman and opted to forego
their 5th delegate. 2,500 delegates, only 16% women.
• CSSF (31.12.2010): 7 directors, including 1 woman (14.3%)
• Bourse de Luxembourg (31.12.2010): 19 directors, including 1
woman (less than 5%) [10 Principles of CorpGov: encourage diversity
+ maximum board size: 16]
• EU Commission Green Paper on corporate governance, 5 April
2011: 12% of supervisory board members in the EU are female
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Recent developments – United Kingdom (1)
• This month changes were announced to the U.K.
Corporate Governance Code to strengthen voluntary
reporting around board diversity. Companies are
encouraged to begin reporting on diversity considerations
immediately (it will formally take effect for fiscal years
beginning on or after Oct. 1, 2012)
• Section B.2.4. of the Code: "A separate section of the
annual report should describe the work of the nomination
committee, including the process used in relation to board
appointments. This section should include a
description of the board's policy on diversity,
including gender, any measurable objectives set for
implementing the policy, and progress on achieving
the objectives. An explanation should be given if neither
an external search consultancy nor open advertising has
been used in the appointment of a chairman or a non3
executive director."
Recent developments – United Kingdom (2)
• UK government in principle against mandatory quotas
• FTSE 100 companies have recruited 23 women to their
boards in 2011 to date – representing 30% of total board
appointments (compared to 13% in 2010).
• Lord Davies has said that companies should adopt a
voluntary target of 25% female board representation
by 2015.
• The number of FTSE 100 companies without a single
woman on their boards has fallen to 14, 21 in 2010.
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Recent developments - Germany
• The German government is split on how to push for more women to sit
on boards, with 3 female ministers not agreeing on a common line. The
labour minister is pushing for a quota, the justice minister strictly
opposes it, and another advocates a “flexiquota” and requires
companies to determine their own goals by 2013.
• The 30 companies listed on Frankfurt's Dax index of leading shares
said they would set targets to promote more female managers. The
German government said firms should aim to increase female
representation on their boards by 30% by 2013. Companies that fail to
meet these goals may face sanctions.
• Germany's minister for labour wants to see an average of 30% female
representation on supervisory and executive boards among listed
companies by 2018. The figure for Germany's 200 biggest companies
is currently 3.2%.
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ArcelorMittal Corporate Governance Structure
• Sets Group strategy, oversees the
executive management (10
members)
• GMB (8 members) implements
strategy, manages day-to-day
operations. Supported by Management
Committee (25 members)
• Monitor and control implementation of
strategy, oversight of legal compliance.
Board of Directors
Group Management Board
Management Committee
Subsidiary
+ Affiliate
BoDs
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ArcelorMittal’s corporate governance rules
• As a company listed on the New York Stock Exchange: the
Listed Company Manual of the NYSE as applicable to
« Foreign Private Issuers » → Exemptions for non-US
companies
→ Compliance is mandatory unless there is an exemption.
• As a company incorporated in Luxembourg and listed on
the Luxembourg Stock Exchange: 10 Principes of
Corporate Governance of the Luxembourg Stock
Exchange
→ « comply or explain »
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Identifying suitable female candidates for BoD
• Offer (relatively scarce) vs demand (high)
• Recruitment process is professional ↔ recruitment firms (departure from « old
boys’ network »)
• Profiles defined by companies are « ideal » rather than « realistic »
• More females candidates outside of industry (law/finance/consulting) may
present conflicts of interest
• Unique challenges faced by heavy industry
• Women ask many questions + tend not to accept more than 2 directorships
(vs. Men who ask few questions + usually accept more than 2 directorships)
• Similar risks existed a few years ago in France where pressure was put on
French companies to « internationalize » → Risk: picking « wrong »
person/profile for the job
• Positive trend: Professionalisation → It’s a real job, not a « favor »
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ArcelorMittal’s BoD: 10 members
- 8 men, 2 women (20%)
Suzanne P. Nimocks was elected director on 25.1.2011
Ms Nimocks, 51, a U.S. citizen, was a director (senior partner) of
McKinsey & Company (the global management consulting firm)
June 1999 - March 2010. She had been with McKinsey since 1989.
She was a leader in the firm’s Global Petroleum Practice, Electric
Power & Natural Gas Practice, Organization Practice, and Risk
Management Practice, and a member of McKinsey’s worldwide
personnel committees.
She chaired the Environmental Committee of the Greater Houston
Partnership, the primary advocate of Houston's business
community, until 31.12.2010.
Bachelor of Arts in Economics from Tufts University +MBA from
Harvard Business School.
She is currently a director of Encana Corporation and Rowan
Companies Inc, both listed companies in the US and Canada, and of
Valerus, a non listed company.
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APERAM – former stainless (inox) and specialty steels
business of ArcelorMittal
APERAM is listed in Luxembourg and on Euronext)
Board of Directors: 7 directors, including 2 women - 29%
• Kathryn A. Matthews (50): British. Extensive experience in the financial sector
with a focus on asset management. Has held senior management roles with Fidelity
International Ltd, AXA Investment Managers, Santander Global Advisors Inc. and
Baring Asset Management. She is a non-executive director of several investment
funds. She has a Bachelor of Science degree with honors in Economics from Bristol
University. Independent director.
• Laurence Mulliez (45): French. CEO of Eoxis since 2010. Privately held Eoxis
produces energy from renewable sources. Ms. Mulliez was previously CEO of Castrol
Industrial Lubricants and Services at British Petroleum 2007-2009 and held various
positions in BP starting in 1999, including Head of Strategy for Gas, Power and
Renewable Energy. She started her career at Banque Nationale de Paris as a
Financial Analyst after a degree from Sup de Co business school in Rouen, France,
and obtained an MBA with honors from the University of Chicago’s Booth School of
Business in 1992. Independent director.
10
CWDI (Corporate Women Directors International)
2010 report & Egon Zehnder International (EZI)
« European board diversity analysis 2010 »
• EZI studied 340 companies in 17 European countries, all
large companies, i.e., a sample of 6 companies per
country.
• 2010: Female representation on boards in the 17
European countries is 12.2% on average [compared to
29% in Sweden, Finland; 32% in Norway].
• BUT: EZI’s sector ranking for companies in “Steels & Other
Metals”: only 4.7% of directors are women.
• ArcelorMittal has 20% of female directors, APERAM 29%
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Bringing women on board lowers average age
• EZI: Shortage of female directors results in younger
women joining boards. When women join boards, the
average board member age becomes lower.
• Luxembourg, 2010: the average age gap between male
and female directors is 16 years.
• ArcelorMittal: 5 out of 10 Board members are 60+.
Excluding Vanisha Mittal Bathia (who is 30), the average
age is 59.4. Including Vanisha Mitttal Bathia, the average
director age is 56.5. At 51, Suzanne Nimocks is 8.5 years
younger than the average director if VMB is excluded from
the calculation.
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ArcelorMittal Group Management Board
ArcelorMittal Management Committee
• Group Management Board (acts by delegation from BoD)
matters): 100% male. 8 members. High degree of diversity
based on nationality (Europe/USA/India). No female members.
• Management Committee (advises GMB): 96% male, 4%
female. 24 male members, 1 female member. The one woman
sitting on the MC is a South African and the CEO of our South
African business. The MC has a high degree of diversity based
on nationality (Europe/USA/Brazil/South Africa).
We have achieved geographic diversity
– but not yet gender diversity.
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Boards of Directors of subsidiaries and affiliates
• ArcelorMittal initiative implemented in 2010 to increase
the number of women on the boards of its
subsidiaries/affiliates
• Purpose? To encourage and promote female talents by
increasing their visibility and providing development and
business perspectives outside their usual roles
• Goal? Increase by 30% the number of women on boards
• Achieved? Yes – we increased by 100% starting from a very
low base
• Future: HR intends to continue to create opportunities like these
which promote diversity and develop (female) talent
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Initiatives to Increase Gender Diversity
at ArcelorMittal
Diversity & Inclusion Policy: Launched in 201, covers the entire group (280,000
employees). Focus is on all diversity factors (racial/religious/gender) + preventing
discrimination, not on gender diversity.
GEDP+ / “Talent Pipeline” programmes: Process for identifying and fostering
management-level talent. All candidates are selected based on education, experience and
performance with stated goal being to identify/promote high potential women. As of the end
of 2010 14% of employees in the programmes were women.
Succession Management: Process for identifying potential candidates for key positions
includes specific actions related to increasing the number of women candidates
15→Deliberate intent to identify female successors.
Dedicated working group formed in June 2011: A dedicated WG has been formed
comprising senior management members, mainly from HR, to study gender diversity issues
and propose initiatives to increase gender diversity throughout the ArcelorMittal group.
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Expanding gender diversity initiatives beyond
the Board of Directors
• Very few companies have publicly committed to self-imposed
quotas/targets:
• Deutsche Telekom announced a self-imposed quota of 30% of
women in senior management by 2015
• Daimler announced a self-imposed goal of 20% of executive positions
to be held by women by 2020
• The 30 companies listed on Frankfurt's Dax index of leading shares
said they would aim to increase female representation on their boards
by 30% by 2013
• Merck announced a target to lift the proportion of female managers to
25-30% by 2015
→ ArcelorMittal has so far not set any such goals.
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QUESTIONS & ANSWERS
© Dilbert
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