Senate Concurrent Resolution No. 62

Introduced by Senator Jackson

(Coauthors: Senators Corbett, Evans, Hancock, Liu, and Pavley)

(Coauthors: Assembly Members Garcia, Lowenthal, and Skinner)

July 11, 2013

Senate Concurrent Resolution No. 62—Relative to women on corporate boards.

LEGISLATIVE COUNSEL’S DIGEST

SCR 62, as introduced, Jackson. Corporations: boards of directors: representation: women.

This measure would encourage equitable and diverse gender representation on corporate boards, and urge that, within a 3-year period from January 2014 to December 2016, inclusive, every publicly held corporation in California with 9 or more director seats have a minimum of 3 women on its board, every publicly held corporation in California with 5 to 8 director seats have a minimum of 2 women on its board, and every publicly held corporation in California with fewer than 5 director seats have a minimum of one woman on its board.

Fiscal committee: no.

WHEREAS, The 2012-2013 University of California, Davis,
Study of California Women Business Leaders found the following:
(1) there is only one woman for every nine men among directors
and the highest-paid executives, (2) no company has a
gender-balanced board or management team, (3) 44.8 percent of
California’s companies have no women directors; (4) 34 percent
have only one woman director, (5) among counties with at least
20 companies, San Francisco County has the greatest percentage
of women directors (15.5 percent) and Orange County has the least
(7.7 percent), (6) firms in the semiconductor industries and those
located in the Silicon Valley tended to include fewer women on
the board and in the highest-paid executive positions, and (7) firms
in the consumer goods sector had the highest average percentage
of women directors and highest-paid executives; and

WHEREAS, A McKinsey and Company study entitled “Women
Matter” showed that companies where women are most strongly
represented at board or top-management levels are also the
companies that perform the best, companies with three or more
women in senior management functions score more highly, on
average, on the organizational performance profile than companies
with no women at the top, and performance increases significantly
once a certain critical mass is attained: specifically, when there
are at least three women on management committees with an
average membership of 10 people; and

WHEREAS, An Oklahoma State University study found that
board diversity, including gender and ethnicity, is associated with
improved financial value and that study also found that a significant
positive relationship between the fraction of women or minorities
on the board and firm value; and

WHEREAS, A report entitled “Women Directors on Corporate
Boards” found that gender diversity on corporate boards contributes
to more effective corporate governance and to positive governance
outcomes through a variety of board processes as well as through
individual interactions; that women directors contribute to
important firm-level outcomes as they play direct roles as leaders
and mentors, as well as indirect roles as symbols of opportunity
for other women, and inspire those women to achieve and stay
with their firms, and that more recognition is needed for the
valuable contribution of women directors to firm value; and

WHEREAS, Credit Suisse conducted a six-year global research
study, commencing in 2006, of more than 2,000 companies
worldwide that showed that women on boards improve business
performance by key metrics, including stock performance, as
demonstrated by the fact that companies with a market
capitalization of more than $10 billion, whose boards have women,
outperformed shares of comparable businesses with all-male boards
by 26 percent; and

WHEREAS, The Credit Suisse report included the following
findings: (1) there has been a greater correlation between stock
performance and the presence of women on a board since the
financial crisis in 2008, (2) companies with women on their boards
significantly outperformed others when the recession occurred,
(3) companies with women on their boards tend to be somewhat
risk averse and carry less debt, on average, and (4) net income
growth for companies with women on their boards averaged 14
percent over a six-year period, compared with 10 percent for those
with no women directors; and

WHEREAS, According to the study entitled “Women Directors
on Corporate Boards: From Tokenism to Critical Mass” and a
report entitled, “Critical Mass on Corporate Boards: Why Three
or More Women Enhance Governance,” attaining critical mass,
going from one or two women directors to at least three women
directors, creates an environment where women are no longer seen
as outsiders and are able to influence the content and process of
board discussions more substantially, and boards of directors need
to have at least three women to enable them to interact and exercise
an influence on the working style, processes, and tasks of the board,
in turn positively affecting the level of organizational innovation
within the firm; now, therefore, be it

Resolved by the Senate of the State of California, the Assembly
thereof concurring, That the Legislature acknowledges that the
body of evidence to date concludes that companies perform better
when their boards and executive leadership include women, and
that the State of California has a significant stake in both protecting
the shareholders of publicly traded companies, as well as setting
policies that enable them to perform better; and be it further

Resolved, That the Legislature, supported by the California
Legislative Women’s Caucus and the National Association of
Women Business Owners California, encourages equitable and
diverse gender representation on corporate boards, and urges that,
within a three-year period from January 2014 to December 2016,
inclusive, every publicly held corporation in California with nine
or more director seats have a minimum of three women on its
board, every publicly held corporation in California with five to
eight director seats have a minimum of two women on its board,
and every publicly held corporation in California with fewer than
five director seats have a minimum of one woman on its board;
and be it further

Resolved, That the Secretary of the Senate transmit copies of
this resolution to the author for appropriate distribution.