Stephen Schwarzman is one of the world's richest and most powerful businessmen. As founder, chairman and CEO of the giant private-equity firm Blackstone Group LP (BX) , he has raked in an average $44 million a year over the past decade, and the firm's $457 billion portfolio of investments includes about 95 companies with half a million employees -- more than twice as many as the automaker General Motors Co. (GM)
Yet as a corporate leader, Schwarzman, 71, lags behind in an area that's increasingly in focus following last year's #MeToo movement: the presence of women on his firm's board of directors.
Blackstone's board includes just one woman -- the retired marketing executive Rochelle B. "Shelly" Lazarus -- among 11 total directors. The percentage works out to 9.1%, a level that would rank the New York-based firm 488th in the Standard & Poor's 500 Index of large U.S. stocks, based on an analysis by BoardEx, a relationship-mapping service of TheStreet Inc. The average for the S&P 500 is currently about 25%.
Indeed, the prevalence of women on Blackstone's board is low even by the standards of the male-dominated private-equity industry: Rival firms Apollo Global Management LLC (APO) and Ares Management LP (ARES) also have only one woman on their boards but just eight directors total, for a proportion of 13%. KKR & Co. (KKR) and Carlyle Group LP (CG) each have two women on 12-member boards, or 17%.
And the gender disparity could have ramifications for Blackstone's shareholders: A growing body of research has shown that corporate boards with more female directors are better at decision-making, and that the companies typically reap higher long-term financial returns. Some experts say women can be more assertive in the boardroom than men and thus more likely to challenge CEOs on crucial topics, such as risk-taking.
Increasingly, advocates for women are pushing for greater representation on the basic principle of fairness, given that nearly half of the total U.S. workforce is female. Last week, a team of six female analysts from Goldman Sachs published a 41-page report arguing that the pay gap between men and women could be partly explained by gender bias, and by the lack of women among the male-dominated ranks of CEOs and boards of directors.
Meanwhile, big money-management firms like BlackRock Inc. (BLK) and State Street Corp. (STT) have pushed for companies to put more women on their boards, in the belief that doing so will improve shareholder returns. Diverse perspectives help to foster healthier debates within boardrooms, the theory goes, resulting in more effective strategic decision-making and potentially higher long-term growth.
And the difference becomes clear when a board has at least three women, ensuring that their contributions will be fruitful, proponents say. The dynamic is partly explained by the reality that when there are least three women on the board, they're more likely to disagree with each other, forcing male directors to recognize that the women's individual perspectives aren't solely gender-based.
Under the glare of the outside pressure, financial companies including U.S. banks Wells Fargo & Co. (WFC) , Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) have added more women to their boards.
But private-equity firms, most of them founded as private partnerships that were shielded from the level of scrutiny given to public companies, have lagged behind, even as they have sold shares in initial public offerings and emerged as major corporate players. Blackstone, which went public in 2007, didn't have a single woman on its board until Lazarus, a former CEO of the marketing firm Ogilvy, joined in 2013.
And if it's true, as studies suggest, that a company's shareholder returns improve with more women on the board, it's not like Blackstone's Schwarzman couldn't use the help: Since the firm's IPO on June 27, 2007, shareholders have received total returns averaging 7.4%, lagging the 7.5% average for the S&P 500.
In an e-mailed statement, Blackstone spokeswoman Jennifer Friedman said that the firm is actively working to increase the diversity of its board of directors, while taking immediate steps to foster the careers of women in the junior ranks.
"We are currently in the midst of recruiting a diverse candidate for our most recent vacant board seat," Friedman said. Meanwhile, she said, the company has doubled the number of women in its incoming analyst class -- entry-level positions -- to nearly 40% from 15% in 2015.
According to a Blackstone official, the firm made an offer earlier this year to a woman to fill a board vacancy created by the resignation on Jan. 30 of former director Peter Grauer. The candidate turned down the offer due to time constraints, according to the official.
Blackstone's lack of progress on board gender diversity comes as rivals in the private-equity industry have taken incremental steps to address the imbalance, while stopping short of wholesale change.
In September, Blackstone rival KKR doubled the number of women on its board to two when it added Mary Dillon, CEO of cosmetics retailer Ulta Beauty Inc. (ULTA) . New York-based KKR's other female director is Patricia Russo, former CEO of telecommunications-equipment maker Alcatel-Lucent SA, now a part of Nokia Oyj (NOK) . Co-founders Henry Kravis and George Roberts are co-chairmen of the firm's nominating and governance committee, which is responsible for recruiting new board members.
Carlyle, another big private-equity firm based in Washington, hired Kara Helander last month as chief diversity officer to focus on "increasing board diversity at our portfolio companies." Yet her remit does not explicitly extend to Carlyle's own board, where the two female directors -- former Goldman Sachs investment banker Lawton Fitt and retired corporate consultant Janet Hill -- are outnumbered by men in the boardroom at a ratio of five-to-one.
"We are proud of our efforts to advance diversity and inclusion yet realize there is more work to be done," a Carlyle spokeswoman said in an e-mailed statement. "We are particularly proud of the diverse representation of our independent board members."
Susan Stautberg, founder and former CEO of WomenCorporateDirectors, a nonprofit organization, said in a phone interview in August that when searching for board members, "typically the guys just pick their best friends, not necessarily the best people to run the company." Stautberg was hired earlier this year to be a corporate-governance adviser to Atlantic Street Capital, a Stamford, Connecticut-based private-equity firm with about $325 million under management.
Blackstone is the biggest publicly-traded private-equity firm in the U.S., with roughly 70% more assets under management than its next-largest competitor, Apollo. By dint of Blackstone's prowess, CEO Schwarzman is often considered one of the deans of the investing industry -- and, by extension, Wall Street.
Schwarzman is frequently interviewed as an expert on finance and economics on channels like CNBC and honored on panels at the World Economic Forum's annual meeting in Davos, Switzerland. He briefly led President Donald Trump's Strategic and Policy Forum, a group of business leaders, until the panel dissolved last year amid public outcry over the president's response to a fatal attack by an alleged white supremacist in Charlottesville, Virginia.
Schwarzman has donated a combined $650 million to Yale University and China's Tsinghua University for buildings and programs, and another $100 million to the New York Public Library, where he's a board member, according to Blackstone's most-recent annual report. In 2007 he was included in Time magazine's list of the 100 most influential people, and he received the Legion d'Honneur from the Republic of France. He has served as an adjunct professor at the Yale School of Management and on the Harvard Business School Board of Dean's Advisors, according to the report.
Under Schwarzman, Blackstone has set up programs to promote women's careers. The Blackstone Women's Network aims to "recruit, develop and retain women" and in doing so to "create a strong community of female professionals within the firm," according to the firm's website.
There's also a Future Women Leaders Program that brings a "high-achieving group" of female college sophomores to Blackstone's New York and London offices each spring to "give participants early exposure to finance and business through interactive information seminars, networking and critical skill-building sessions," according to the website.
Such skills might eventually come in handy on Blackstone's board. Just not now -- in the future.