BILL ANALYSIS �
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THIRD READING
Bill No: SCR 62
Author: Jackson (D), et al.
Amended: As introduced
Vote: 21
SUBJECT : Corporations: boards of directors: representation:
women
SOURCE : Author
DIGEST : This resolution 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.
ANALYSIS : This resolution cites the following studies and
reports relative to the representation of women on corporate
boards:
1.University of California, Davis (Study of California Women
Business Leaders, 2012-13) . Found there is only one woman for
every nine men among directors and the highest-paid
executives; no company has a gender-balanced board or
management team; 44.8% of California's companies have no women
directors; 34% have only one woman director; among counties
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with at least 20 companies, San Francisco has the greatest
percentage of women directors (15.5%) and Orange has the least
(7.7%); 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
firms in the consumer goods sector had the highest average
percentage of women directors and highest-paid executives.
2.McKinsey and Company ("Women Matter" study) . 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).
3.Oklahoma State University study . Found that board diversity,
including gender and ethnicity, is associated with improved
financial value and that a significant positive relationship
between the fraction of women or minorities on the board and
firm value.
4."Women Directors on Corporate Boards" report . 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.
5.Credit Suisse (six-year global research study of more than
2,000 companies worldwide) . 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%. The Credit Suisse report found that
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there has been a greater correlation between stock performance
and the presence of women on a board since the financial
crisis in 2008; companies with women on their boards
significantly outperformed others when the recession occurred;
companies with women on their boards tend to be somewhat risk
averse and carry less debt, on average; and net income growth
for companies with women on their boards averaged 14% over a
six-year period, compared with 10% for those with no women
directors.
6."Women Directors on Corporate Boards: From Tokenism to
Critical Mass" study and "Critical Mass on Corporate Boards:
Why Three or More Women Enhance Governance" report . States
that 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.
This resolution provides 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.
This resolution 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.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 8/14/13)
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National Association of Women Business Owners, California
MW:k 8/14/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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