Woman on board!
California becomes the first state to mandate women on boards of companies.
(News Credit : CNN Money New York)
The new law was passed on Sunday stating that all-male boards would no longer be acceptable – if the company is publicly traded and headquartered in California. The requirement would be to place at least one woman on their board of directors by the end of 2019, or else face a penalty. It also requires companies with five directors to add two women by the end of 2021, and companies with six or more directors to add at least three more women by the end of the same year. It’s the first such law on the books in the United States, though similar measures are common in European countries.
This measure was passed by California’s state legislature last month and signed into law on Sunday by Governor Jerry Brown. The hope is that this measure will help in protecting and supporting women, and also act as a crucial step towards establishing better parity in corporate leadership. A majority of companies in the S&P 500 have at least one woman on their boards, but only about a quarter have more than two, according to a recent study.
It has been shown by several independent studies that companies with women on their boards are more profitable and productive since women comprise over half the population and make 70% of the purchasing decisions. It is also the hope that having more women in positions of power would reduce the cases of sexual assault and harassment. It is high time the U.S. catches up with Norway and other European countries that require that women make up as much as 40% of the board.