USA TODAY International Edition
California considers gender quotas
Bill would require female executives in businesses
As California Gov. Jerry Brown ponders whether to sign a landmark bill that would make the state the first in the nation to require more women in boardrooms, he will weigh reams of evidence that point to the benefits of such inclusion. Brown will have to consider the misgivings and downright opposition over gender quotas – female executives among them. The bill sitting on Brown’s desk, known as SB 826, would mandate public companies with headquarters in California to have at least one woman on their board of directors by the end of 2019 and, depending on the size of the board, a minimum of two or three by the end of 2021. Penalties for noncompliance would start at $100,000 for the first violation and increase to $300,000 for future instances. On its face, the legislation might seem worthy of universal support from women, who make up 47 percent of the workforce but only 17.7 percent of board membership nationwide. However, concerns about government intrusion and possible charges of tokenism cloud optimism about the bill’s potential for those seeking gender equality in boardrooms. “It’s tough to have the government make decisions for us in terms of the ways we run our businesses, and I personally would prefer that we not have the legislation and that the right thing happens anyway,” said Patty McCord, a former Netflix executive now on the board of Lending Club. “So I’m kind of against the legislation but for pushing it because it brings it to life.” McCord’s mixed feelings reflect the quandary facing some advocates who want to advance the cause but not necessarily through a new law. The California Chamber of Commerce is considerably more adamant in its opposition, drafting a statement warning the bill “places California companies in a legal predicament.” While agreeing with the legislation’s intent, the Chamber argues that SB 826 considers only one element of diversity – gender – and may violate the U.S. and state constitutions. “On the policy basis, it gets into managing a corporate board, and it really should be left to the shareholders to determine what’s best for the corporation,” said Jennifer Barrera, senior VP for policy at the Chamber. “And on the legal issue, it faces a number of legal obstacles and challenges.”
Aiming for gender parity
Proponents counter by saying governmental intervention is appropriate to change an entrenched culture of maledominated power that shows little sign of relenting. They also point to the successful inclusion of women on boards in European countries – Germany, France, Spain and Italy among them – that have established minimum quotas of up to 40 percent. Some independent studies show companies with at least one female director perform better than those without any. A global analysis of more than 2,000 companies by Credit Suisse, conducted from 2006 to 2012, revealed those with a female presence on the board did better in key metrics, including stock performance. Shares of companies with female directors and market capitalization of more than $10 billion outperformed similar businesses with all-male boards by 26 percent. Still, the movement toward gender parity in the U.S. – where there is no minimum mandate – has progressed glacially at best. The bill cites statistics from 2017 showing one-fourth of California’s 446 public companies in the Russell 3000 stock index did not have a single female director. Women held just 566 of the 3,655 total board seats in those companies, or 15.5 percent. Nationally, almost half of the 75 largest IPOs from 2014 to 2016 were launched by companies with no women on their boards. Of the companies in the Fortune 500, only 24 have female CEOs. California state Sen. Hannah-Beth Jackson, a Democrat from Santa Barbara who sponsored the legislation, authored a nonbinding resolution in 2013 urging corporations to diversify their boards. In the years since, the percentage of board seats held by women in the state increased from 15.5 percent to 16 percent. “At that rate, it’s going to take many lifetimes to get that level of gender parity,” Jackson said. “When we’ve let market forces work, that glass ceiling can’t be penetrated. Even with all the data that shows adding women to corporate boards is good for business, we haven’t been able to make that case successfully.” The bill never would have been crafted if more female executives were in a similar position to Kirsten Wolberg, the chief technology and operations officer for DocuSign, who sits on three boards. Wolberg found a willing sponsor in former Silicon Graphics CEO Jorge Titinger, who was so impressed with the list of candidates he found when seeking to diversify his board that he added Wolberg and Nina Richardson at the same time in January 2016. That made their entry easier, but Wolberg hasn’t forgotten the years she spent as the only female voice at executive meetings in technology companies and the conflict that dynamic engendered. She’s part of a group of women who have been pushing for more diversified boards for at least 10 years and cites statistics that show 87 percent of the openings are filled through the members’ networks. “It’s time penalties are introduced,” said Wolberg, a strong advocate of the bill. “I much prefer the carrot than the stick, but the carrot isn’t working.”
Other states could follow suit
That’s part of the reason why proponents such as Meesha Rosa say SB 826 is necessary and could spur similar legislation in other states. Rosa manages corporate board services for Catalyst, an organization that advocates for women in the workplace and helps promote them into leadership positions. “It’s been happening at a very slow, incremental pace without legislation, so now is the time for bolder approaches to advancing women into the boardroom,” Rosa said. “This is just one example and could serve as a template moving forward.” A handful of states, including Massachusetts and Illinois, have passed nonbinding resolutions such as the one Jackson initially promoted in California. Observers believe states with progressive leadership are bound to follow suit if Brown signs the bill into law. The governor has until Sept. 30 and has not indicated which way he’s leaning. Even in a liberal state such as California, widespread acceptance is far from certain, and Jackson acknowledges a legal challenge is possible and perhaps likely.
“When we’ve let market forces work, that glass ceiling can’t be penetrated. Even with all the data that shows adding women to corporate boards is good for business, we haven’t been able to make that case successfully.” California state Sen. Hannah-Beth Jackson