This past Sunday, California Governor Jerry Brown signed into law a groundbreaking, and controversial, bill. SB826 mandates that all publicly traded California companies have at least one woman on their boards by the end of 2019. And it doesn’t stop there. The requirement ramps up in 2021: Five-member boards will be expected to have two female members, and boards with six or more members will be expected to have three. SB826 applies to companies whose main offices are in California, and also foreign companies whose U.S. headquarters in the state.
Many are applauding this bill, saying that it is shattering yet another glass ceiling, and is clearly needed considering the current numbers. As of late August, women held just 546, or 15.8 percent, of the 3,445 seats on boards of directors at the 467 publicly traded California companies in the Russell 300 index, according to Bloomberg. And putting women on boards will most likely positively impact the companies this bill is affecting. 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, return on equity, and transparency.
So why would people be against it?
Governor Brown himself expressed some reservations in a signing statement, recognizing that “serious legal objections have been raised” about the bill. “I don’t minimize the potential flaw that indeed may prove fatal to its ultimate implementation.” However, Brown added, “recent events in Washington, D.C. — and beyond — make it crystal clear that many are not getting the message. … 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.”
Opponents of the bill, such as California Chamber of Commerce, the California Restaurant Association, and the California Ambulance Association, worry that it may leave some companies scrambling to find female board members and question the constitutionality of the choice to favor one element of a diverse workforce over all others.
It will take a while to see any potentially negative effects from SB 826. But for now, it seems like a great, and perhaps necessary, step in the right direction. As Democratic Senator Connie Leyva of Chino, a co-author of the bill, said, the bill sends “a big message to women that we value them, we respect them here in California.”
And that’s exactly the kind of message we need echoing throughout America right now.
By: Cianna Allen