A biopharmaceutical startup in San Francisco called Medivation is developing a new drug for both prostate cancer and breast cancer – a potentially life-saving treatment for diseases in men and women. During the past year, the innovative company made some bold moves with little notice or fanfare. The firm, which had an all-male board of directors, named three women directors. Other publicly held California companies should take note.
As the Legislature wound down its session last month, sending the governor a flurry of bills, lost amid the din of last-minute lobbying and debate was the near unanimous passage of the first resolution in the nation urging public companies to add more women to their boards. Senate Concurrent Resolution 62 passed the Senate by a vote of 30-6 and sailed through the Assembly 65-3. Clear bipartisan support and a call to action.
By December 2016, the resolution urges publicly held California companies with boards of nine or more to fill at least three of those seats with women, for boards of five to eight seats to have two women, and for smaller boards at least one woman.
The resolution, championed by the National Association of Women Business Owners, is well supported by research that documents both the significant lack of women on corporate boards in California and the importance and value of a variety of perspectives in the boardroom.
Women held only 10.5percent of board seats at the state’s 400 largest companies in 2012 and there has been shockingly little change since 2006, according to the latest annual UC Davis Study of California Women Business Leaders, which gave rise to the resolution. That’s barely one woman for every nine men in the corporate boardrooms of these leading Golden State companies, which account for about $3trillion in stock market value.
In fact, nearly half of the 400 firms in the UC Davis study had no women directors, including Adobe Systems Inc., California First National Bancorp, GenCorp Inc., Monster Beverage Corp., Skechers USA and Cheesecake Factory Inc.
Of the 400 companies, only 13percent meet the new guidelines of SCR 62. Those that do, such as Medivation – now with three women and four men on its board – realize the value of diverse viewpoints.
Opening more corporate doors to women is about much more than just gender equality; it can be a financial benefit to companies and their employees. A number of studies have shown that companies with more women board members have improved financial performance. Last August, a Credit Suisse study that looked at 2,360 companies globally found that companies with at least one woman on their boards did better than those without women, in terms of higher average growth, stock price performance and other metrics.
California has no lack of women qualified to serve on corporate boards. Qualitative research shows that the informal and formal channels through which executives and directors are identified and hired strongly favor men over women. We need to break up this “boys club.”
The lack of women in corporate leadership is a problem for California companies and for our economy as a whole. The state of California has a significant stake in protecting the shareholders of publicly traded companies and setting policies that enable them to perform better.
This resolution, while not a mandate, sends a strong message about the imperative for gender diversity in the boardrooms of companies of all sizes.
Steven C. Currall is dean and professor of management of the UC Davis Graduate School of Management, which publishes the annual UC Davis Study of California Women Business Leaders. State Sen. Hannah-Beth Jackson, D-Santa Barbara, is vice-chair of the California Legislative Women’s Caucus and author of Senate Concurrent Resolution 62.