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California becomes first state to require a woman on corporate boards

California state Sen. Hannah-Beth Jackson authored a bill passed into law this year that will require at least one woman on boards of corporations with headquarters in the state by 2019 and three on most of those boards by 2021. (Rich Pedroncelli / AP)
California state Sen. Hannah-Beth Jackson authored a bill passed into law this year that will require at least one woman on boards of corporations with headquarters in the state by 2019 and three on most of those boards by 2021. (Rich Pedroncelli / AP)
By John Woolfolk and Levi Sumagaysay Mercury News (San Jose)

Gov. Jerry Brown on Sunday signed a bill making California the first state to require public companies to have at least one woman on their board of directors to advance gender equality and help break the corporate glass ceiling.

The bill, SB 826, by Democratic Sens. Hannah-Beth Jackson, of Santa Barbara, and Toni Atkins, of San Diego, was designed to combat bias against experienced, qualified female employees in the workplace.

“Yet another glass ceiling is shattered, and women will finally have a seat at the table in corporate board rooms,” Jackson said Sunday on Twitter as she thanked the governor for signing the bill. “Corporations will be more profitable. This is a giant step forward for women, our businesses and our economy.”

In a rare move, Brown included a message with the bill’s signing.

“There have been numerous objections to this bill and serious legal concerns have been raised,” the governor said in a letter to the state Senate, a copy of which he sent to the U.S. Senate Committee on the Judiciary. “I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation. Nevertheless, recent events in Washington, D.C. – and beyond – make it crystal clear that many are not getting the message.”

Brown went on to say that corporations have been “considered persons” for a long time – even before women were allowed to vote.

“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 the ‘persons’ in America,” the governor said.

Advocacy groups also applauded the bill’s signing Sunday.

“We’ve seen a lot of companies in the tech world struggle to diversify,” said Bruce Mirken, media relations director at Greenlining Institute, an Oakland group that works on racial and economic justice issues. “You have to think that if those voices were more present in their boards of directors, they’d be doing better.”

The legislation would mandate that all publicly traded California companies have at least one woman on the board by the end of 2019. By the end of 2021, it calls for at least two women on boards with five directors. At least three women will be required on boards of companies with at least six directors. Companies that don’t comply will be fined $100,000 for their first violation.

Many big California companies have had women serve in prominent roles. In 1999, Carly Fiorina became the first woman to lead a Fortune 20 company as the CEO of Hewlett-Packard. Meg Whitman served as CEO of both eBay from 1998 to 2008 and Hewlett-Packard from 2011 to 2015, where she presided over its strategic split and serves on the Hewlett-Packard Enterprise board.

But as of June 2017, 26 percent of the 445 publicly traded companies in California had no women on their boards, despite some studies that suggest companies with women on their boards perform better.

Harmeet Dhillon, a committeewoman for the Republican National Committee and a San Francisco lawyer, was opposed to the legislation even though she said she has experienced gender discrimination in her own legal profession.

While she agreed that “it would probably be better for American businesses if they had more diversity on their boards – women and minorities,” she said that “having the government mandate that is completely ridiculous and counterproductive to how businesses should be run.

“When you have mandates, you’re going to have every woman who gets that board appointment question whether she got that on her own merits,” Dhillon, who also warned about increased litigation over the issue, said Sunday.

But the bill’s co-author, Jackson, felt it was necessary because she wasn’t seeing any progress. An ”aspirational“ resolution that she wrote in 2013 urging corporate boards to voluntarily add women “fell on deaf ears,” with the percentage of women on corporate boards barely inching up from 15.5 percent in 2013 to 16 percent five years later.

“Sometimes in order to change culture, you have to have legislation,” Jackson said earlier this month. “Would I prefer companies would have recognized they are more successful, more productive, more profitable” when they add women to boards, she asked. ”Absolutely. But it didn’t happen.“

Jackson added that “it’s no coincidence” that the company of disgraced movie mogul Harvey Weinstein, ousted in an avalanche of sexual harassment and abuse complaints from actresses, had no women on its board.

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