California lawmakers are considering a bill that would require every publicly traded company in the state to keep a minimum threshold of women serving on their corporate boards or face a fine.
Senate Bill 826 requires that each firm have at least one woman serving on their board of directors by the end of next year. Boards with five directors must have a minimum of two women, and boards with six or more directors must have three or more females by July 2021 under the legislation.
Language in the bill clarifies that “‘female’ means an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth.”
SB 826 was introduced and co-authored by state Sen. Hannah-Beth Jackson (D-Santa Barbara), who told The Sacramento Business Journal, “Boards are where the policy decisions are made about how a company operates. This is one of the last good-ol’-boy fiefdoms, and we need to do something drastic about it.”
“Women on boards of directors perform better for shareholders,” Jackson told KOVR-TV, adding that in spite of that, a quarter of California’s 445 publicly traded companies do not have any women serving in their boardrooms.
The legislation would require the California secretary of state to issue annual reports documenting corporations’ compliance under the proposed legislation. Firms found to be in violation would face a fine equivalent to the average pay for the company directors on the first offense. Each subsequent violation would result in a fine equal to triple the average compensation.
The National Association of Women Business Owners – California sponsored the bill, which was introduced in January.
NAWBO endorses the passage of SB 826 on the organization’s website, where it states that women being required to serve on corporate boards is “above all a business issue,” because “numerous independent research studies have shown that having gender diversity on corporate boards is beneficial to the corporation.”
The group also noted that European countries have already imposed similar mandates. Norway and France both require 40 percent of board seats to be held by women, and Germany requires a 30 percent quota.
SB 826 passed the state Senate and is now on its way to the Assembly for consideration.