Women Belong on Corporate Boards: California is the First State to Write it Into Law
Research shows that companies with at least one female director perform better than their all-male counterparts, yet the percentage of women on corporate boards in California was 16 percent this year, barely budging from 15.5 percent in 2013, according to USA Today. “In the first five months of 2018,” The Wall Street Journal reported, “women accounted for 248, or 31%, of new board‑directors at the country’s 3,000 biggest publicly traded companies, according to an analysis of corporate filings by ISS Analytics, the data arm of Institutional Shareholder Services.” In 2017, 624 public companies had no women on their boards at all, reported by Oliver Stanley for Quartz at Work.
“After years of public and internal pressure to increase gender parity at the top of the corporate ranks, few of the biggest companies have zero female board directors,” the Associated Press announced in The News & Observer. “But men vastly outnumber women on boards across nearly every industry, a landscape that has remained stubbornly unchanged despite years of debate and studies on the subject. Facebook, Apple and Google’s parent company Alphabet are among the several hundred companies headquartered in California that would have to add women to their boards by 2021 to comply with the law.”
The new law, the response and the road ahead
The law, one of several boosting or protecting women, was signed by Gov. Jerry Brown on September 30, making California the first state to require publicly traded companies to include women on their boards of directors. The measure requires at least one female director on the board of each California-based public corporation by the end of next year. Companies would need up to three female directors by the end of 2021, depending on the number of board seats. Companies will be fined $100,000 the first year they fail to meet these requirements and $300,000 for each additional year they do not comply. They will also be fined $100,000 if they do not report the gender ratio of their board of directors to the California secretary of state.
“There have been numerous objections to this bill, and serious legal concerns have been raised,” Brown stated in his signing letter on September 30. “Nevertheless, recent events in Washington, D.C. – and beyond – make it crystal clear that many are not getting the message. As far back as 1886, and before women were even allowed to vote, corporations have been considered persons within the meaning of the Fourteenth Amendment, Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886). Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America.”
The bill was sponsored by state Sens. Hannah-Beth Jackson and Toni Atkins. “We are not going to ask any more,” Jackson said in August in a floor speech on the bill, the Los Angeles Times reported. “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.” A quarter of the 445 publicly traded companies in California don’t have a single woman on their boards, according to KQED reports. “It’s time that we burst that man-cave and put women in the boardrooms,” Jackson said. She also told USA Today that the law is “a giant step forward not just for women but also for our businesses and our economy. It’s my hope that corporations, rather than fight this, will acknowledge its value and take the lead on pulling together and bringing greater diversity into their boardrooms.”