Women are in every realm of government, law, academics and private enterprise — but they aren’t in every boardroom. California is trying to change that, becoming the first state in the nation to require female representation on public company boards.
All public companies based in California will have to have at least one female board member by the end of 2019 or face fines of $100,000 for the first violation. The number of female board members required goes up by the end of 2021 based on the size of the corporation.
The importance of the law can’t be understated: almost no one thinks this will be “one and done.” Companies outside California are approaching Jana Rich, the founder and chief executive of executive search firm Rich Talent Group, in search of women for their boards, reports The Wall Street Journal. She said corporate leaders expect other states to consider similar legislation soon.
“They’re trying to get ahead of the curve,” Rich said in the piece. C-Suite magazine’s summer 2019 issue reports that “California will most certainly not be the last state to pass a mandate of this nature.”
So far, 68% of the 94 public companies in the state that had all-male boards when the law passed have added at least one woman, according to the Athena Alliance, a nonprofit that helps women land board directorships. Companies that have added women this year include semiconductor-testing company Cohu and cloud software firm Veeva Systems.
Illinois debated a bill that would add a similar mandate this year, requiring a woman and an African-American on Illinois-based publicly traded boards. The legislature eventually passed a law that instead requires companies to report on the racial, ethnic and gender diversity of their boards.
Many companies outside those states are adding female representation in an effort to improve governance and brand reputations. Governance research firm Equilar announced recently that the percentage of women on boards of companies in the Russell 3000 surpassed 20% in the second quarter of 2019, up from 15% in January 2017.