California Bill Would Make Companies Add Women to Their Boards

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It probably won’t come as too much of a surprise, but the number of women serving on the boards of American companies is ... lacking.

Women only hold 16 percent of the seats on boards of companies on the Russell 3000, an index composed of the biggest companies in the US. While there are some wins to be celebrated, like that women occupied 20 percent of board seats in 2017 — an increase from 14.6 percent in 2011 — there are still 624 publicly traded companies that have zero women on their boards.

That there are so many boards made up of only men — and not a single company whose board is made up entirely of women — means change will happen at a painstaking pace, if at all. In the meantime, the state of California is trying to take matters into its own hands.

Earlier last month, the state Senate passed a bill, called SB 826, that would make public companies headquartered in California without women on their board add at least one by the end of 2019. The bill also states that by 2021, companies with five directors would have to have two women on their board, and those with six or more directors would have to add at least three. Companies that don’t comply will be fined.

The proposed legislation echoes the policy of some European countries; Norway, Germany, Sweden, Iceland, Finland, and France have quotas and fines in place for their publicly traded companies to add women. The state Assembly will vote on SB 826 by August 31, and if passed, California will become the first state in the US to enforce such a rule.

California is known for its liberal-leaning politics, and as far as representation of women on boards goes, it’s one of 13 states where more than 20 percent of company board seats are held by women. Still, there are two major California companies that don’t have any women on their boards: Skechers and Tivo. If the new bill passes, these companies will have to add an additional seat to their board, or must fill a vacant position with a woman.

While the fact that Tivo doesn’t have any women on board might not be too big of a shock — chalk it up to the tech world’s gender problems in general — Skechers feels like a somewhat odd offender, considering it has a strong sneaker business with women and girls (and was also the brand behind the beloved heeled ’90s sneaker).

The company currently brings in an annual $4 billion in sales, but there’s been plenty of research done on the benefits of female board representation. One study concluded that boards with women perform better financially than those without; another found that women sitting on the board help a company in the long run because women are less likely to encourage fraud. As Diane Sullivan, the CEO of Caleres, which owns Famous Footwear and Sam Edelman and has a board of 55 percent women, said recently, “a diverse board means diverse perspectives, experiences and approaches, and it just makes good business sense.”

California’s proposed bill faces opposition, and some researchers argue that the tactic of tokenizing women is flawed in general. California’s Chamber of Commerce, along with a slew of organizations, even wrote a letter to the Senate slamming it, pointing out that automatically adding a woman to a company board doesn’t touch on discrepancies like race or ethnicity. The letter also claims the bill would violate men’s rights, because “if there are two qualified candidates for a director position, one male and one female, SB 826 would require the company to choose the female candidate and deny the male candidate the position, based on gender.” (Which, cringe.)

California’s bill — and the opposition to it — comes just as the UK is engulfed in a similar conversation. Two weeks ago, England’s Department for Business, Energy, and Industrial Strategy interviewed executives from some of the biggest companies in the country (on the FTSE 350) about why there aren’t more women on their boards. Their excuses included, “I don’t think women fit comfortably into the board environment,” “All the ‘good’ women have already been snapped up,” and “There aren’t that many women with the right credentials and depth of experience to sit on the board — the issues covered are extremely complex.” As one activist told the Guardian, “you might think it’s 1918, not 2018. It reads like a script from a comedy parody.”

California’s SB 826 bill will no doubt stoke conversation in California’s private sector too, where startups, venture capital, and Silicon Valley are riddled with issues of gender as well as race — it was only a year ago that during an all-hands meeting about sexism at Uber, a board member joked about how having more women on board would result in “more talking.” And Harvard’s T.H. Chan School of Public Health has calculated that nearly 80 percent of venture capital firms have never placed a woman on the boards of companies they invest in.

Toni Atkins, the California state Senate president pro tempore, who supports the legislation, has spoken up for the bill on the Senate floor, reportedly challenging the room flat out: “Why is it so hard for us to try and make the case that women in leadership and women on corporate boards could have a positive impact on your bottom line? I don’t know why I have to stand here and actually plead.”