EY’s Allie Rutherford: Corporate Governance Creates Better Business Results

December 11, 2013 7:00 pm
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By Barbara Frankel

Allie Rutherford, EYAllie Rutherford understands the power of data in driving corporate decisions and results.

As the leader of EY’s Washington, D.C.–based Corporate Governance Center, she studies issues and collects data on matters of concern to investors, boards of directors and management. Her job is to make the data relevant, communicate it to all interested parties, and raise awareness about the importance of ethical corporate governance.

“Corporate governance is very company-specific, but you can’t get there without an awareness of best practices, investor concern and priorities,” she says. “We have an important job. It’s not just the practices a company determines to put in place but how they are communicated and received by the community.”

Effective corporate governance, she notes, requires that “the right people be at the table—and that means the right board of directors with informed decision-making and one in which norms are challenged.”

Getting Women on Boards

Rutherford and the center recently put out a groundbreaking report “Getting on Board” on women’s progress on boards of directors in the United States. The center studied the board composition of Standard & Poor’s top 1,500 companies from the time of their 2006 annual meetings to their 2012 annual meetings. The report found that 14 percent of the board seats were held by women, a 3 percent increase over the six-year period.  By contrast, the 2013 DiversityInc Top 50 companies have 25.8 percent female board directors.

The report found that only a little more than 30 percent of the S&P 500 have added a female director in the past six years.

“There is growing recognition that one of the greatest obstacles to gender diversity on boards is the lack of turnover. U.S. investors are looking at ways now to broaden the base of board candidates by looking at ‘qualifications’ and looking beyond the C suite. There are efforts under way at several companies to build the C-suite pipeline and there’s more support for C-suite women to serve on outside boards,” she says.

Culture of Values

Rutherford came to EY in 2011 after the Big Four firm bought the research assets of her previous employer, PROXY Governance, which worked on data and recommendations to institutional investors. It was a good fit.

“EY knows that corporate governance works based on its own experience. EY has seen that diverse teams produce better results. As a company, we believe that it carries through to our board governance,” she says.

She notes that EY’s recent rebranding “is to build a better working world, to harness and develop talent in all its forms and encourage collaboration—and that really ties into corporate governance.”

Growth Opportunities

So what led Rutherford to become a corporate-governance expert? She grew up about an hour north of Detroit and attended Michigan State, majoring in political science and economics. Drawn to politics and government, she moved to Washington, D.C., in 1997 and joined the Investor Responsibility Research Center a year later.

“Corporate governance was just becoming known in the time period [1997–1998] and there was a quickly growing intersection with the regulatory environment,” she says. She saw an opportunity to get in at the ground level and grow. After six years, she jumped to PROXY Governance. The move to EY was a great opportunity for her.

“Here, the client was not an institutional investor but bringing the information to the corporate side,” she says.

Along with diversity management, she sees corporate governance currently focusing largely on environmental topics. The center analyzes data from public filings with the Securities and Exchange Commission, covering more than 3,000 of the largest publicly traded U.S. companies. The center also maintains relationships with members of the investor and governance community as part of its efforts to track prevalent and emerging governance trends.

Rutherford has also been looking at data on governance of small- and mid-cap companies to ascertain what governance issues are most essential to them.

“Effective corporate governance creates safer, sounder environments for companies, shareholders and auditors, and builds trust and confidence in the capital market,” she says.

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