It’s been more than 25 years since the biggest names on Wall Street started being hit by massive sex discrimination claims. Each time they ponied up millions of dollars, bank leaders piously promised to make their firms more hospitable to women who wanted an equal shot at success in a high-paying, mostly male industry.
These days, the company that faced the most egregious allegations, Citigroup, is run by Jane Fraser, the first woman to become chief executive of a major US bank. At Morgan Stanley, another company that settled, 40 per cent of total staff and 47 per cent of its entry-level hires are women. And Goldman Sachs, which paid $215 million (€198 million) just last year to settle long-running gender discrimination claims, can also brag that its most recent class of new partners was the most diverse yet, with 29 per cent women.
So some things have changed. Yet the top echelons of American finance are still overwhelmingly male. As much as 45 per cent of the financial companies in the S&P 500 have no women among their “named executive officers”, those C-suite members important enough to have their pay officially disclosed, according to new research by Morningstar Sustainalytics. Other stereotypically male sectors have made significantly more progress: just 26 per cent of industrial companies are led by all-male teams, says director of stewardship Jackie Cook.
Even more depressing, it feels as if some things are going backwards. At Goldman, Stephanie Cohen, the lone female head of a core division, has been on extended leave since the middle of last year, and it emerged recently that another female member of the management committee, Beth Hammack, is leaving after she was passed over for chief financial officer.
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Citigroup, meanwhile, appears to be reverting to the mean after Fraser’s groundbreaking appointment. The lender’s choice last week of Vis Raghavan to head banking means that all five heads of its operating divisions and its CFO are men.
Although Morgan Stanley has its second female CFO in Sharon Yeshaya, all three candidates in last year’s race to replace James Gorman as CEO were men. The top leadership of private equity firms that compete for Wall Street talent are equally if not more male-dominated, as are the big UK banks after the forced 2023 departure of NatWest’s Alison Rose.
That makes it worth looking closely at JPMorgan Chase, where longtime chief executive Jamie Dimon gets credit for building up a chunky pipeline of female heavy hitters. Women make up almost half the 16-member management committee, including the head or co-head of all three major businesses. A recent reshuffle saw two of them, Jennifer Piepszak and Marianne Lake, bolster their position as leading contenders to replace Dimon, should he ever retire.
JPMorgan benefits from having large commercial banking and asset management divisions, which are widely seen as more female-friendly than rough and tumble trading floors and travel-heavy investment banking. These days, it also exudes an aura of success after a heady period that has seen it rise to become the US’s biggest bank.
The combination has given Dimon a larger pool of mid-career women from which to fish for future leaders, and rivals conceded that the bank has worked hard not to squander those opportunities.
But no Wall Street firm that is serious about wanting diversity of thought and experience in their top leadership can afford to rest on its laurels. Post-2008 financial crisis reforms and the rise of big tech mean that banking has lost some of its recruiting cachet and financial firepower. Women with the chops to make it to senior management in banking are also in demand in other industries, so they don’t have to sit around and wait their turn for a shot at the top on Wall Street.
Morgan Stanley’s first female CFO, Ruth Porat, famously decamped to Google in 2015 to do the same role for much more money; more recently Thasunda Brown Duckett left JPMorgan Chase to head up investment group TIAA and Katie Koch departed Goldman for the CEO role at asset manager TCW. Hammack’s post-Goldman destination is already being discussed eagerly by recruiters scrambling to fill a plethora of open CFO positions.
Big bank executives say that such job-hopping is nothing new. Ambitious bankers of any gender do not like to be told to sit and wait for a plum assignment. Guys who got tired of waiting for the chance to lead JPMorgan, Morgan Stanley and Goldman are now scattered across the top ranks of other companies, and it only makes sense that some women are following the same track.
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But my conversations with senior women in finance suggest that such complacency is a mistake for an industry with a still slender pipeline of mid-career women. Though overt gender discrimination is thankfully much rarer, they report that many managers still favour people with whom they feel comfortable and that men with a take-no-prisoners management style are rewarded with challenging assignments in a way that women are not.
So when the external headhunters come calling, many of Wall Street’s up and coming female executives are inclined to listen. Who wants to wait in line for an uncertain shot at leadership, when she can go somewhere else and take charge right now? – Copyright The Financial Times Limited 2024
