California, long a social and economic trendsetter, this week marked another by becoming the first state to require that women serve as directors on public company boards.
In doing so, it joined several European countries in setting quotas for women’s participation, which has woefully lagged that of men.
Here, women hold just 19 percent of corporate board seats, while in France, Norway and Sweden, which have legislative or voluntary targets, they hold more than 30 percent, according to business advisory firm McKinsey & Co.
The California legislation, signed Sunday, mandates that all publicly traded companies headquartered in the state have at least one woman on the board by the end of next year. By mid-2021, the requirement is a minimum of two women on five-member boards and at least three on boards of six or more.
In his signing message, Gov. Jerry Brown acknowledged legal concerns raised about the law, but said it was “high time that corporate boards include the people who constitute more than half” of the U.S. population.
For years, advocates like 2020 Women on Boards and the 30 Percent Coalition – their names reflecting their goals – have rallied for faster inclusion of women, contending boards need more diversity in helping management set the course for companies.
The 2020 group annually tracks the number of women on the boards of a 2010 baseline of the country’s largest firms, the Fortune 1000. It reported that more than half now have 20 percent or more of their board seats held by women; a quarter still have just one or no female director.
The 30 Percent Coalition lists the New York State Common Retirement Fund among its supporters, and Comptroller Thomas DiNapoli, who oversees the fund, has for years used its investments in public companies to press for more female directors.
The $207 billion fund is the country’s third largest public pension plan, investing assets on behalf of state and local government workers, retirees and their beneficiaries.
In March, DiNapoli vowed to vote fund shares against directors standing for re-election in 2017 at companies with no women on their boards. If a company had just one female director, the shares would be voted against anyone on the governance committee standing for re-election, since that panel vets candidates for board vacancies.
A spokesman said DiNapoli followed through on the promise, and as of Aug. 31 voted shares against 1,784 directors at 400 public companies with no women on their boards and against 1,612 directors at 700 companies with just one female director. The fund has about 3,000 companies in its portfolio.
Asked about the new California law, spokesman Matthew Sweeney said DiNapoli’s first tack is to negotiate with companies on increasing board diversity.
But if similar legislation were proposed in New York, “the office would review it to determine if it’s something we could support.”
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].