More diverse and aged: a snapshot of Portuguese companies' boards
However, 83% of women on companies' boards are in non-executive positions. New study also shows that Portugal is still behind the EU.
What?
The boards of directors of Portugal’s largest companies now include more women than a decade ago, according to a new study by the multinational Odgers Berndtson Board Solutions, which examined the 30th largest companies in the country.
“There have been significant improvements in gender diversity, with the percentage of women on boards rising from 10% in 2013 to 34% in 2024,” the study highlights, based on data from the 30 largest companies in Portugal, including all publicly listed ones.
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Despite the noted improvement, Portugal still compares poorly with many European countries “where female representation is often close to or even above 40%.”
In statements to ECO, the study’s author, Nuno Fernandes, said that France, Italy, Denmark, and Belgium are the top-performing countries in this regard, while there is only one country worse off than Portugal: Spain.
Moreover, although Portuguese boards of directors now include more women than a decade ago, most of these professionals hold non-decision-making roles. Around 83% occupy non-executive positions, meaning only 17% are in executive roles.
The study highlights that female representation in leadership remains low, with only 7% of board chair positions and 4% of CEO roles occupied by women.
Legal changes
In Portugal, since 2017, a law has required publicly traded companies to have at least 33.3% of board positions held by women, but it does not set quotas for executive versus non-executive roles.
When asked whether such minimums should be mandated in light of the current data, Nuno Fernandes declined to comment. Instead, he argued that to foster change, companies need more inclusive recruitment, along with internal mentorship programs and diverse succession plans.
Earlier this year, university professor and researcher Sara Falcão Casaca, cited by the Francisco Manuel dos Santos Foundation, called for quotas for both executive and non-executive positions, given the predominance of women in non-decision-making roles.
Aged company boards
In addition to becoming more gender-diverse, Portuguese boards have aged over the past decade.
The average age of board members increased from 56 in 2013 to 58 in 2023, with board chairs averaging 64 years old. The study also notes a “significant decline in members aged 40 to 50,” with only 21% now in that age group.
In contrast, 43% are between 50 and 60, 25% are between 60 and 70, and 10% are over 70. The report warns that boards lacking generational renewal risk losing dynamism.
“This is due to the fact that a large portion of boards have not undergone significant renewal in the past decade. Around 25% of members have held their positions for ten years,” notes Nuno Fernandes in statements to ECO.
While acknowledging the value of experience, the expert emphasizes that older boards risk lacking “fresh perspectives.” Hence, it is crucial to strike a balance between experience and renewal.
To achieve this, Nuno Fernandes recommends “refreshment policies,” such as setting maximum age limits, clearly defining succession plans, and recruiting based on skills.
Foreigners in boards
Another change observed in boards of directors over the past decade has been an increase in international diversity.
“The presence of foreign members on boards has grown from 14% to 18%, with 94% holding non-executive positions,” the study explains. However, it also notes that 37% of the analyzed boards still do not have international members.
Improvements in Governance?
Despite the aforementioned progress, Portuguese boards continue to show “below-average levels compared to Europe in several governance indicators, such as the separation of the roles of CEO and chair, leadership diversity, and international representation,” points out the multinational Odgers Berndtson Board Solutions.
“The alignment with global best practices will be essential for Portuguese companies to face the challenges of modern governance and meet the expectations of international investors,” the study titled “The State of Board Diversity: Portugal’s Journey and Its Place in Europe in 2023” asserts.
Specifically regarding the separation of roles, it is noteworthy that 30% of Portuguese companies maintain the same individual as both CEO and chair, a practice that has “increased slightly over the last decade.”