California Gov. Jerry Brown signed Senate Bill 826 into law on Sunday, requiring all publicly traded companies whose principal executive offices are in the state to have at least one woman on their board of directors by the end of 2019.
This trailblazing law — a first among U.S. states — comes as Brown’s term approaches its limit. He’ll be leaving office in early 2019.
The measure requires that public companies must have up to three female directors by the end of 2021, depending on the number of board seats, the Associated Press reported.
Thank you @JerryBrownGov for signing #sb826 ! Yet another glass ceiling is shattered, and women will finally have a seat at the table in corporate board rooms. Corporations will be more profitable. This is a giant step forward for women, our businesses and our economy @NAWBOCA
— Hannah-Beth Jackson (@SenHannahBeth) September 30, 2018
On boards of directors at 467 publicly traded California companies listed on the Russell 300 index, women held 15.8 percent of the 3,445 seats as of late August, according to Bloomberg.
Five-member boards will be required to have two female members, and boards with six or more members will be expected to have three.
By signing the bill into law, Gov. Brown was literally sending a message to Washington, D.C.
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“’Recent events in Washington, D.C. — and beyond — make it crystal clear that many are not getting the message,” Brown said. ‘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 of all ‘persons’ in America.'”
Not everyone’s happy about the law and it faces a legal battle, but women are supportive, USA Today reported.
Californians polled in new survey from The Boardlist agreed overwhelmingly — 95 percent — that corporations don’t do enough to add more female directors. Seventy-one percent said they support the bill signed into law by Gov. Brown on Sunday night.
Of those surveyed outside of California, 98 percent said they want a similar bill passed in their own states. TheBoardlist is an organization that highlights women who are qualified to sit on corporate boards. Its survey polled 250 people, mostly women. It found that 80 percent of women vs. 40 percent of men support the new law. Fewer than half of Republicans support the new law versus 85 percent of Democrats.
The California Chamber of Commerce and other business groups oppose the law, arguing that imposed quotas are unconstitutional. Those opposed cited government overreach.
@JerryBrownGov #sb826 This makes as much sense as requiring men, women, trans, and a hermaphrodite on the board. Forcing diversity doesn't make a company profitable. That said, diversity is a good thing. This falls under government overreach.
— Tim Graupmann (@tgraupmann) October 1, 2018
“Brown’s actions come as the #MeToo movement against sexual misconduct led to a reckoning nationwide that has ousted men from power, AP reported. The latest high-profile allegations are against Supreme Court nominee Brett Kavanaugh, who has denied decades-old claims of sexual misconduct from three women.”
The bill cited studies by MSCI, Credit Suisse and UC Berkeley that found that companies with women on their boards have greater earnings per share, greater return on equity and transparency, SF Chronicle reported.
“Yet another glass ceiling is shattered, and women will finally have a seat at the table in corporate boardrooms,” said co-author of the bill, Sen. Hannah-Beth Jackson, D-Santa Barbara.