Companies headquartered in California can not have all-male boards.
That’s in response to a brand new legislation, enacted Sunday, which requires publicly traded companies within the state to position at the least one lady on their board of administrators by the tip of 2019 — or face a penalty.
It additionally requires corporations with 5 administrators so as to add two girls by the tip of 2021, and firms with six or extra administrators so as to add at the least three extra girls by the tip of the identical 12 months.
It’s the primary such legislation on the books within the United States, although comparable measures are widespread in European international locations.
The measure was handed by California’s state legislature final month. And it was signed into legislation by Gov. Jerry Brown on Sunday, together with a trove of different payments that look to “protect and support women, children and working families,” the governor’s workplace mentioned in a launch.
A majority of corporations within the S&P 500 have at the least one lady on their boards, however solely a couple of quarter have greater than two, in response to a research from PwC.
California state Sen. Hannah-Beth Jackson instructed The Wall Street Journal final month when the laws handed that “one-fourth of California’s publicly traded companies still do not have a single woman on their board, despite numerous independent studies that show companies with women on their board are more profitable and productive.”
“With women comprising over half the population and making over 70% of purchasing decisions, their insight is critical to discussions and decisions that affect corporate culture, actions and profitability,” she instructed the outlet.
Some see California’s legislation as a vital step towards establishing higher parity in company management.
But setting quotas will be controversial, Vicki W. Kramer, lead writer of the landmark 2006 research, “Critical Mass on Corporate Boards,” instructed CNN final month. Opponents argue that strain from quotas will result in unqualified feminine members and potential discrimination in opposition to male candidates.
When quotas are usually not set, nevertheless, corporations could fail to diversify their ranks. She factors to extra “aspirational” laws in different states, like in Pennsylvania, the place a 2017 decision urged each private and non-private corporations to have a minimal of 30% girls on their boards by 2020. But with out enamel within the legislation, Kramer mentioned, higher numbers received’t comply with.
Kramer mentioned California’s laws is weak in comparison with the legal guidelines in Norway and different European international locations, which require a sure share of girls on boards. For bigger Norwegian corporations, the laws requires that ladies make up as a lot as 40% of the board.