California Lawmakers Approve Bill To Require Corporate Boards To Include Women
Source: Los Angeles Times, Patrick McGreevy
Photo: California lawmakers want more women on corporate boards. (Sheraton)
Citing a lack of diversity in corporate boardrooms, state lawmakers on Thursday sent the governor a bill that would require women to be included on the boards of directors of firms headquartered in California.
The bill would require that publicly held corporations headquartered in the state include at least one woman on boards of directors by the end of 2019, and at least two by July 2021. Corporate boards with six or more members would be required to have at least three women on the panels by the middle of 2021.
The measure was proposed because women make up 52% of the state’s population but just 15% of the directors of its public corporations, according to state Sen. Hannah-Beth Jackson (D-Santa Barbara), a co-author of the bill with Senate leader Toni Atkins (D-San Diego).
“We are not going to ask any more,” Jackson said in a fiery floor speech. “We are tired of being nice. We’re tired of being polite. We are going to require this because it’s going to benefit the economy. It’s going to benefit each of these companies.
“It’s time that we burst that man-cave and put women in the boardrooms,” Jackson added.
The legislation was opposed by a coalition of 30 business groups including the California Restaurant Assn., the California Chamber of Commerce, the California Trucking Assn. and the Long Beach Area Chamber of Commerce. They issued a joint letter that said they support gender equity, but said the legislation is illegal.
The state chamber of commerce said the measure “requires publicly traded corporations to satisfy quotas regarding the number of women on its board or face significant penalties, which is likely unconstitutional, a violation of California’s Civil Rights statute, and a violation of the internal affairs doctrine for publicly held corporations.”
The bill was approved by the Senate on a 23-9 vote, with opposition from Republicans including Sen. Joel Anderson of Alpine.
“I can’t support a bill that underestimates the power and strength of women,” Anderson said. “To say that they can’t find their way onto a board without our help undermines all their hard work.”
Lucy Dunn, president and CEO of the Orange County Business Council, had a similar opinion.
“This legislation is, to me, insulting,” Dunn said in a statement after the vote. “Rather than celebrate the competitive advantage women bring to positions of leadership in a company, it relegates them to placeholder status.”
Atkins responded angrily to those who say the bill isn’t necessary.
“I am sick and tired of being in a position of influence and power and yet seeing so many people like me who are still pleading to be given that opportunity,” Atkins told her colleagues.
“This is going to make a big difference in the boardrooms of the companies headquartered in California,” said Annalisa Barrett, a clinical professor of finance at the University of San Diego’s School of Business, who has done research on the gender makeup of corporate boards.
She estimated that some changes will have to be made by 377 California-headquartered companies that are on the Russell 3000, an index that tracks the performance of the 3,000 largest U.S.-traded stocks. Many more smaller companies will also be affected, Barrett predicted.
Jackson said women make more than 70% of purchasing decisions so “their insight is critical to discussions and decisions that affect corporate culture, actions, and profitability.”
Supporters cite similar efforts in Norway, which in 2003 required that 40% of corporate board seats be held by women. Three years ago, Germany mandated that 30% of corporate board seats be held by women.
“Adding women board members to our public corporations will help advance family-friendly policies in the workplace and bring California one step closer to gender equity,” said Anne Staines, statewide president of the National Assn. of Women Business Owners.