BILL ANALYSIS Ó
AB 1255
Page 1
ASSEMBLY THIRD READING
AB 1255 (V. Manuel Perez)
As Amended April 26, 2011
Majority vote
ECONOMIC DEVELOPMENT 5-0 APPROPRIATIONS 17-0
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|Ayes:|V. Manuel Pérez, Grove, |Ayes:|Fuentes, Harkey, |
| |Block, Hueso, Morrell | |Blumenfield, Bradford, |
| | | |Charles Calderon, Campos, |
| | | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
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SUMMARY : Requires the Secretary of State (SOS) to provide a
link of his or her Internet
Web site to the Internet Web pages of either the California
Public Employees' Retirement System (CalPERS) or the California
State Teachers' Retirement System (CalSTRS), or both, where
information on registries of potential qualified candidates for
corporate boards, if available, can be found.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor absorbable costs to SOS.
COMMENTS : CalPERS and CalSTRS are working with an advisory
panel of leading corporate governance experts to develop a new
digital resource devoted to finding untapped talent to serve on
corporate boards. This resource is called, the Diverse Director
DataSource (3D), and will offer shareowners, companies and other
organizations a facility from which to recruit individuals whose
experience, skills and knowledge qualify them to be a candidate
for a director's seat.
Market impacts of California's demographic shift: As
unprecedented numbers of baby boomers prepare to retire from the
market place, many corporate boards will be seeking new members
to help shape their businesses for the future. This demographic
trend reflects not only a generational shift in the United
States (U.S.), but it also marks a shift in the race and
ethnicity of the nation's working age population.
AB 1255
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Companies that want to remain competitive are designing new and
adapting existing products and services to meet this expanding
market. Corporate leadership, however, has not kept pace with
the changing demographics, and there remains a gap in the ethnic
and gender diversity on corporate boards and the population
at-large.
According to a 2008 report by Virtcom Consulting on the
leadership of Fortune 100 companies, while women comprise
slightly more than half the U.S. population, they hold only 17%
of the positions on corporate boards of Fortune 100 companies.
The same report states that research suggests that companies
with more diverse boards have higher performance and other
financial metrics such as return on equity, return on sales, and
return on investment.
One of the initial barriers to becoming a candidate for
corporate board membership is being recommended by the
consultant or "Headhunter" who has been hired by the company to
present the board with a slate of prospective candidates. Often
these slates have a limited number, if any, of female candidates
or candidates of color. With corporate boards most interested
in choosing from among the very best prospective board members,
increasing the diversity among the "known" pool of qualified
candidates is essential. Investors, as well as nonprofit
professional organizations, are responding to this need for new
and more inclusive pools of qualified corporate board candidates
through the development of 3D.
Facilitating the dissemination of this information through cost
effective web links supports sound private sector decision
making by enabling boards to be even more selective when seeking
the highest quality board composition. The state also benefits
from strong, diverse corporate boards as they have proven to out
perform other companies in the field, resulting in higher state
taxes based on higher corporate revenues and greater job
retention and creation.
Nothing in this bill requires that the candidates in the
registries be selected, rather the bill offers useful
information to a select and targeted audience. There is no
known opposition to the bill.
AB 1255
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Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0000484