A Bill requiring at least one woman on every public company board by next year, and two women for every board of five members and three for boards of six by 2021, passed the California state assembly this week.
The Bill will now move to a vote by the California senate on Friday, which already approved an earlier version of the Bill, and then on to the governor to sign into law.
“With women comprising over half the population and making over 70 per cent of purchasing decisions, their insight is critical to discussions and decisions that affect corporate culture, actions and profitability,” said state senator Hannah-Beth Jackson, who wrote the Bill.
“The time has come for California to bring gender equity to our corporate boards,” she said.
Women comprised 19.8 per cent of board seats on Fortune 1000 companies in the US last year, according to 2020 Women on Boards, a non-profit group. In California women comprise 20.8 per cent of directors of Fortune 1000 companies based there.
National average
The state ranks eighth overall among US states for the percentage of women on boards, although it still only has an average of 1.65 women per board, according to Equilar. The national average is 1.75 women per board.
“The quota system is one way to solve the problem, although it does raise serious legal challenges and I’m not sure if it will pass muster.
“However, the fact that California is home to 86 companies in the Russell 3000 [INDEX]that don’t have any women on their boards is more than a wake-up call that requires change,” said Evan Epstein, founder of the corporate governance consultancy Pacifica Global in Silicon Valley.
Although this would be the first government-mandated quota for women on company boards in the US, there is precedent for doing so in European countries.
Norway, Iceland, Finland and Sweden all have government-mandated quotas for the number of women on boards. – Copyright Financial Times Ltd
