Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning.
When Wendy Cai-Lee launched Piermont Bank in 2019, she says she didn’t set out to build a board of directors led—and dominated—by women. “I was so focused on finding the best board to help me,” she says. Initially, her board consisted of seven directors, five of whom are women, including chairwoman Julia Gouw. In early February, Piermont added two more female directors, bringing its percentage of women occupying board seats to 78%. In comparison, women occupy about 30% of seats on Russell 3000 corporate boards, according to research from 50/50 Women on Boards.
Steady as she goes
Piermont’s commitment to board diversity—many directors are also multicultural—comes as many corporations and institutions are rethinking or scrapping initiatives aimed at increasing the participation of underrepresented groups in workplaces and leadership roles, including corporate boards, amid a changing legal landscape. The U.S. Supreme Court’s 2023 ruling striking down affirmative action in college admissions has had a chilling effect on workplace inclusion efforts. Late last year, a federal court struck down a Nasdaq rule that required listed firms to include at least one woman, person of color, or LGBTQ director on their boards, or explain the absence of a diverse director.
Research suggests diversity can improve board effectiveness, and Cai-Lee says that her female directors have helped steer the company in positive ways. The board has supported a permanent hybrid schedule even as other financial institutions are demanding that employees return to the office full time. “We understand people have family lives, they need to buy their bus or train tickets, they need to make childcare arrangements,” Cai-Lee says. “Because we have female representation, the board was supportive from day one to have that commitment [to hybrid schedules] regardless of what happens at other banks.”
The governance gauntlet
To be sure, Cai-Lee is in a unique position to shape her board. Because Piermont is a new bank, Cai-Lee says she had a “blank slate” rather than inheriting legacy directors who might have fit an outmoded definition of board representation. Piermont, a digital-only bank with about $550 million in assets under management, is also a Minority Depository Institution (MDI), which means it is a federally insured institution where 51% or more of the voting stock is owned by minority individuals or which serves a minority community.
And while the bank is privately held, it is also a Federal Deposit Insurance Corporation (FDIC) bank and has to meet key governance standards. Last year, the FDIC issued a consent order instructing Piermont to review two years of transactions and strengthen its compliance and internal controls. “In the last 18 months, we invested more resources in enhancing risk oversight programs and process improvements that align with regulatory needs,” she says. “We believe the fixes are behind us, and we are ready to serve our clients in a safe and sound way.”
So far, Cai-Lee says Piermont hasn’t faced questions about its unabashed embrace of gender parity on its board. “We have not received any pushback from clients or customers or investors—and these are my key stakeholders—and certainly not from employees because they joined Piermont mostly because of who we are,” she says.
Banking on women
While Piermont’s female board representation is impressive, it is worth noting that other banks have also achieved gender parity. Eight of Citigroup’s 14 directors are women, including CEO Jane Fraser, and half of Amalgamated Bank’s directors are women, including CEO Priscilla Sims Brown and board chair Lynne Fox.
Elevating more women to board chair or lead director roles—like we’re seeing at Piermont and Amalgamated Bank—may be the next frontier in board diversification. “Chairs and lead directors wield an incredible amount of influence. They create agendas, prioritize topics, and make sure all voices on the board are heard,” says Alicia Syrett, who heads up Madam Chair, a group of more than 300 women who serve as chairs or lead directors at publicly traded companies. “Encouraging more women to pursue these board leadership roles results in new perspectives on leadership, risk management, and team dynamics. Board members continuously share learnings of best practices across organizations, and increasing the number of women in board leadership roles gives us even more options and knowledge on how we can make companies and boards more successful.”
What’s your board ratio?
Has your company achieved gender parity on your board of directors? What difference, if any, has it made to the effectiveness of your company or board? Please send your ideas and examples to [email protected]. Your responses may form the basis of a future newsletter.
Read more: women in leadership
- Women who play sports are more likely to be business leaders
- The surge in women CEOs is no coincidence
- Women make up 43% of Britain’s top board rooms
- Meet Maggie Lena Walker, the first Black woman to charter a bank in the U.S.
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