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Parity Progress: Public real estate companies above average for women’s representation on boards and in executive offices.
from CPM/GTA October 2021
by MediaEdge
PLODDING PARITY PROGRESS
WOMEN ARE somewhat more conspicuous in commercial real estate’s executive suites and boardrooms than is the average for Canadian companies that disclose such information to regulators and unit/ shareholders. A recently released report on diversity disclosure practices in public companies, from Osler, Hoskin and Harcourt LLP, draws findings from 629 companies that revealed the gender breakdowns of their boards and 575 companies that enumerated women executive officers as of July 31, 2021.
Results show that women are gaining presence in these top echelons, but are still very much the minority.
“The Canadian public company boards continue to add more women directors at a steady pace. The rate at which women are being appointed this year reached its highest level yet, with women filling 39.1% of the newly created or vacated board seats, a significant increase compared to a rate of 35% last year,” observe the report’s authors, Andrew MacDougall, John Valley and Jennifer Jeffrey. “Women are making very little progress at the executive officer level. The proportion of women executive officers increased slightly to 18.2% from 17% last year, but is largely unchanged since 2015 (when it was 15%), and only 10.7% of TSX-listed companies have targets for women executive officers (largely unchanged from last year).”
This is the seventh year that TSX-listed companies have provided numbers aligned with the “comply or explain” rule. It requires venture issuers to report whether they have written policies, procedures and targets for bringing women onto boards and into executive officer roles or to explain why they do not.
ACUTE ABSENCES Additionally, beginning in 2020, amendments to the Canada Business Corporation Act (CBCA) expanded the field of designated disclosers to cover all distributing corporations — i.e. to include those that trade on other exchanges inside or outside of Canada — with requirements for separate reports related to visible minorities, Indigenous peoples and people with disabilities. For the first seven months of this year, 318 companies offered data that indicates the modest to miniscule presence of these three additional groups within their top leadership.
Visible minorities filled 6.8% of disclosed board positions, while Indigenous peoples and people with disabilities each accounted for 0.5%. Visible minorities hold executive officer positions at 71 companies, while just eight companies count people with disabilities in their executive offices and a mere two companies have Indigenous executive officers.
The analysis reveals greater evidence of stated intent. More than one third of disclosing companies report that they have written policies committed to expanding the diversity of boards, while “a substantial portion” confirms that diversity is one of the decision-making factors for executive officer appointments. However, for now, companies are more likely to have stated policies pertaining only to women.
“In order to make progress on diversity beyond gender, public company boards will need to change their approach to the identification and appointment of directors from these designated groups,” MacDougall, Valley and Jeffrey conclude. “While we acknowledge that issuers must generally rely on executive officers to self-identify as being a member of any of the prescribed designated groups, the low numbers reflected above indicate that there is nonetheless significant room for improvement.”
REAL ESTATE Real estate ranks fourth among 13 identified sectors for the percentage of women holding executive officer positions. That’s pegged at an average of 2.06 women per disclosing real estate company or 24% of executive officer positions versus an average of 1.69 women per company or 18.2% of executive officer positions across all disclosing companies.
The report cautions that differing approaches to leadership structure and the size of executive ranks can skew sector-to-sector comparisons. “This explains why in the real estate industry, for example, the average number of executive officers is close to the overall average, but women represent a relatively high percentage of the executive officers,” it notes.
Accordingly, 3.19 female executive officers per company translates to 23% of such roles in the financial services industry, while 1.72 female executive officers per company translates to 11% of such positions in the energy services sector.
Real estate ranks fifth, tied with consumer products and services, for the 25% female component of disclosing companies’ boards of directors. That breaks down to an average of 1.91 women directors per board. Meanwhile, women fill 22.1% of board positions across all disclosing companies, equating to an average of 1.83 women per board.
Real estate companies are also highlighted in the report’s best practices section. Artis Real Estate Investment Trust, Dream Impact Trust and Dream Unlimited Corp. are among 10 companies cited for boards of directors with at least 50% female representation.
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SALARY INCREASES REVERT TO PRE-PANDEMIC INCREMENTS
Real estate and construction employers are generally budgeting for salary increases in the range of 2.8 to 3% for 2022. A survey of 829 Canadian companies — which the human resources consulting firm, LifeWorks, conducted in the summer of 2021 — indicates the two sectors will offer slightly more generous top-ups to non-unionized workers’ wages than the projected national average across 21 industry sectors.
The LifeWorks analysis also finds a substantial majority of employers expect to convey annual incremental increases in 2022 after two years when pandemic-related freezes were prevalent. More than a third of survey respondents imposed salary freezes in 2020 and 12% kept freezes in place for 2021, while just 3.3% definitively plan to do so next year. Although another 18% are undecided and leaving the possibility of salary freezes open, the report notes that 46% of respondents identified themselves as undecided heading into 2021.
“Our analysis reveals that the overall average base salary increase will be 2.7% excluding salary freezes and 2.5% including salary freezes. These figures are more in line to pay increases experienced in past years [prior to the pandemic], suggesting a more optimistic sense of pay restoration,” the report states.
When factoring in the large percentage of salary freezes in 2020, the average base salary rose just 1.6% for the year, compared to 2.4% in 2019 and 2.5% in 2018. In practice, 64% of workers received an average salary increase of 2.2% last year, while 36% stayed at the same level as their previous year’s earnings.
In 2021, employees across the 49 construction firms participating in the survey saw gains of 2.3% on their base salaries. However, the workers who actually received increases (i.e. excluding companies with freezes in place) got an average 2.6% bump up in earnings. Next year, they can look forward to a projected 3% increase.
Surveyed construction employers are based in four provinces — British Columbia, Alberta, Ontario and Quebec — although many of them are national firms with projects and workers across Canada.
Employers in the real estate, rental and leasing sector were more likely to impose salary freezes in 2021. Across 16 surveyed companies, the base salary rose an average of 2.%, but the workers who actually received raises did much better. The average salary increase jumps to 2.7% when wage freezes are eliminated from the calculation. Next year, a further 2.8% top-up is projected.
The 16 surveyed companies are based in six provinces — British Columbia, Alberta, Manitoba, Ontario, Quebec and Nova Scotia — but some have national portfolios and employees throughout the country.
For more information about the LifeWorks 2022 Salary Projection Survey, see https:// lifeworks.com/en/resource/2022-salary-projection-survey-report.
Corp., MCAN Mortgage Corporation., Chartwell Retirement Residences, Melcor Developments Ltd., Melcor Real Estate Investment Trust and Dream Impact Trust are among 22 companies flagged for executive officer contingents of at least 50% women. SOME EXPLANATIONS MISSING The percentage of public companies that lack diversity policies and practices continues to shrink, but remains a stubborn to sizeable fraction. As of mid-year 2021, about 67% of disclosing companies have written policies specifically tied to identifying and nominating women board candidates and about 32% have set targets for female board membership.
Nearly 83% of companies confirm they take female representation into account when identifying and appointing executive officers, but fewer than 11% have set targets.
Despite the disclosure rule’s moniker, MacDougall, Valley and Jeffrey note that a significant minority of companies do not explain their inaction. For example, more than 40 of the 209 companies disclosing that they do not have written policies pertaining to the diversity of their boards were silent on the reasons.
The majority that do not set targets for women on boards or in executive positions most commonly cite misgivings about how targets could affect selection processes perceived to be based on merit. “Other reasons included the concerns that targets are ineffective and/or arbitrary or are inappropriate when considering the small number of directors on the board,” the report summarizes.
Generally, larger companies in the TSX-60 index appear to more proactively pursuing gender balance. For example, 98% report at least two women on their boards and 31.5% have at least five women directors. The number of women executive officers — an average of 3.3 per company, filling 21.6% of disclosed executive officer positions — surpasses the overall average, while 20% of TSX60 companies have set targets for increasing women’s representation.
As with other environmental, social and governance (ESG) initiatives, MacDougall, Valley and Jeffrey hypothesize that institutional investors are helping to push the agenda forward.
“Only two companies in the S&P/TSX Composite Index that reported the number of women on their boards had allmale boards, perhaps reflecting a response to ISS’ (Institutional Shareholders Services) decision that, starting in 2022, it would recommend withhold votes on the chair of the nominating committee of such companies if women make up less than 30% of the board and the board has not adopted a 30% target,” they state. zz The complete report, 2021 Diversity
Disclosure Practices: Diversity and leadership at Canadian public com-
pa nies, can be found online at www.osler.com/en/resources/governance.
