California Becomes First State to Mandate Female Board Directors (WSJ)

#1
https://www.wsj.com/articles/califo...e-board-directors-1538341932?mod=hp_lead_pos8

California became the first state to require companies based within its borders to put female directors on their boards, adding to pressure on boardrooms across the country to give more women a seat at the table.

California Gov. Jerry Brown on Sunday signed a landmark bill mandating that all publicly traded companies with headquarters in the state have at least one woman on their boards by the end of next year. By 2021, companies with at least five directors would need to have two or three female directors, depending on the size of the board, according to the new law. Those that don’t face financial penalties.


“It’s high time corporate boards include the people who constitute more than half the ‘persons’ in America,” Mr. Brown said in a letter to the California state Senate announcing his decision.
Some don't think it will survive the Constitutional test, including those in favor of the law in spirit:

Joseph Grundfest, a Stanford University law professor and former commissioner of the Securities and Exchange Commission, said that while he believes corporate boards are still too white and male and that the law is “well-intentioned,” he considers the mandate unconstitutional and said it would likely affect only a fraction of companies if successfully challenged on jurisdiction grounds. That is because relatively few companies are both based and chartered in California. The Supreme Court has previously ruled that a corporation’s internal affairs, such as the makeup of its board, are governed by the statutes of the state in which it is chartered, not headquartered, he wrote in a working paper published in September.

Mr. Grundfest said he worried the law would lead to only minor gains in boardroom diversity and, if litigated, could create a risky precedent for more-needed affirmative-action efforts. “It is an example of where the cure could be worse than the disease,” he said.
California wants to stipulate this law for corporations that are chartered outside of the state but also have headquarters in California, something that is very tricky legally. SCOTUS already ruled that only the charter state can govern corporate boards.
 
#6
I feel like something more akin to the NFL Rooney rule would be better. Companies should be required to interview/consider female candidates but requiring them to hire them despite all other considerations seems a bit too far to me.
 
#7
I feel like something more akin to the NFL Rooney rule would be better. Companies should be required to interview/consider female candidates but requiring them to hire them despite all other considerations seems a bit too far to me.
I would agree. Corporate boards are tricky. They're based on strong personal networks, not just track records. They are overwhelming white and male. It's a hard problem to solve.
 
#10
How many companies don't already have 1? I would assume it's a very small percentage at this point, especially when so many boards have 15-20 members. I like the intent but have a hard time seeing it pass federal court challenges
 
#13
I feel like something more akin to the NFL Rooney rule would be better. Companies should be required to interview/consider female candidates but requiring them to hire them despite all other considerations seems a bit too far to me.
Boards of directors don’t really work like that. They’re elected by shareholders just set broad goals for the company in the shareholders’ interests and hire the executives who do the day-to-day managing, so it’s not really a job where you’re looking for particular skills, where you would have to worry about hiring someone “less qualified”.
 
#15
I wonder if all male boards will need to kick one guy out to be replaced by a woman, or do companies expand the board?

This sounds pretty good
 
#18
I can't get behind this idea.
It should be merit based, everything should be merit based god damn it. Not race, not gender and not visual appearance. But our world is so broken, we are putting these quick fixes around. But it does not solve the real issue of inequality.
 
#19
This seems like it would be extremely harsh for small companies which likely have a small board of directors and would barely impact big companies with large boards or the ability to make the board larger.
 
#20
I can't get behind this idea.
It should be merit based, everything should be merit based god damn it. Not race, not gender and not visual appearance. But our world is so broken, we are putting these quick fixes around. But it does not solve the real issue of inequality.

Do you think it's currently merit based?
 
#23
I feel like something more akin to the NFL Rooney rule would be better. Companies should be required to interview/consider female candidates but requiring them to hire them despite all other considerations seems a bit too far to me.
I agree with this.
 
#25
this will probably be in courts for a long time.
no its not and thats what I am saying. Our world is fucked and this does not solve any problem. You shouldn't get a board seat just because you are a woman, and you shouldn't get paid higher because you are a man.
how do you propose it gets fixed then? a lot of people will say it's wrong but cant really offer any ideas on how to fix it.
 
#29
Do you think it's currently merit based?
That's the tricky situation. Connections are a form of power and thus an asset a corporate board officer brings to the table. Unfortunately, "merit" as it is usually discussed doesn't take this into affect.

At the high levels of organizations it's about relationships and that's a huge part of competence. However, the standard job interview rubric doesn't apply well to corporate officers.

Is this also why Deleware is a tax haven?
Of course. Delaware corporations, the name of corporations chartered in that state, have tons of legal and tax benefits not found elsewhere. Delaware has monopolized corporate charters because of this.
 
#32
I feel like something more akin to the NFL Rooney rule would be better. Companies should be required to interview/consider female candidates but requiring them to hire them despite all other considerations seems a bit too far to me.
The Rooney Rule doesn't work though. In rare occasions you have instances where teams come across someone they had no intention of hiring like Pittsburgh with Mike Tomlin, but usually you'll have teams who know who they want - and will just schedule an interview with a person of color as a way to check a box.
 
#33
The Rooney Rule doesn't work though. In rare occasions you have instances where teams come across someone they had no intention of hiring like Pittsburgh with Mike Tomlin, but usually you'll have teams who know who they want - and will just schedule an interview with a person of color as a way to check a box.
Yeah, it's almost more insulting for the minority candidate if they have no realistic chance of getting the job but are interviewed because they have to be.

Also, this isn't just one female board member.

If a corporation has five, two of them need to be female.
Six or more, three of them have to be female.

The Senator who introduced this says that 1/4 of the publicly traded companies in CA have no female board members.

So yeah, a lot of smaller boards will have to be expanded and/or shuffled.
 
#35
But almost every business is smart and has their main thing set as delaware soo it doesn't matter and this is unconstitutional, you can't force a company to hire a certain amount of anything whether its female, minorities, sexuality etc. It won't pass litigation
 
#36
But almost every business is smart and has their main thing set as delaware soo it doesn't matter and this is unconstitutional, you can't force a company to hire a certain amount of anything whether its female, minorities, sexuality etc. It won't pass litigation
From Brown's statements, it seems like he knows this is going to be challenged, maybe he even knows it'll likely be overturned but he's trying to send a message. But the fact that this message will seemingly waste a lot of people's time seems wrong to me (if he indeed thinks it doesn't really have a shot).
 
#38
Yeah I don't think I can get behind this. I get what they're trying to do, but to me credentials and experience should always win out over any kind of bias. The best person for the job should be hired.
 
#41
My company’s headquarters is in Ohio and just learned today it was chartered in Delaware too lol.

On topic. The gag about America is, is that the constitution provides cover for the straight white male group to drag their heels on incorporating anybody but them into institutional governance/decision making. This is the same argument with affirmative action.

The constitution is an arbitrary document that was created with the intention of benefiting one group over others. The fact that it can be used as a bludgeon against attempts to speed along systemic changes is laughable, 200 years later.
 
#42
Bad idea. Mandating this crap is how you end up with people being appointed to positions and acting as pawns for the appointer. So your board maybe goes from 12 men to 10 men with 2 women who just vote for two of the men anyway, so the distribution of power is even more corrupted.
 
#43
If it was really based On merit a boards makeup should always be representative of the population of candidates, which in this case means it should always be roughly 50% female. Also even ignoring that, diversity in group make up has proven benefits to overall a groups quality and ability to perform, so being an underrepresented group is inherently a merit in this sort of situation in and of itself. Ideally we wouldn’t have to force it, but I think things like this and affirmative action need to be forced until the norms have effectively shifted and they’re no longer needed, otherwise change will never really happen
 
#45
The Rooney Rule doesn't work though. In rare occasions you have instances where teams come across someone they had no intention of hiring like Pittsburgh with Mike Tomlin, but usually you'll have teams who know who they want - and will just schedule an interview with a person of color as a way to check a box.
There were 2 minority head coaches in the NFL before the rule was implemented and there are 8 now so I wouldn't exactly say it doesn't work
 
#47
If the fucking world cant find a balance on its own on things as simple as men and women having the same opportunity, then you bet you need to enforce it. Is it ideal? No. Fair in many cases? Nope. But we live in a shit world and we need to enforce certain balances.
 
#49
Serious question for all of the people decrying an initiative to fix the issue of sexist hiring practices. If this is not the solution, what is? Because the solution should not and indeed cannot be "leave it be."

no its not and thats what I am saying. Our world is fucked and this does not solve any problem. You shouldn't get a board seat just because you are a woman, and you shouldn't get paid higher because you are a man.
This wouldn't result in unqualified women in positions of power. This is a conservative myth about affirmative action programs.
 
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