The Current Diversity Landscape
The landscape in California is particularly dynamic and it is essential to be up to date on the actions by influencers including the 2018 Senate Bill and actions by asset management firms.
Two women on boards
In its discussion of the importance of boards comprising a diverse selection of individuals bringing to bear a range of experiences and competing views and opinions, BlackRock emphasized that in addition to other elements of diversity, the investor would “normally expect to see at least two women directors on every board.”
Flexibility on board leadership structure
BlackRock continues to support the designation of a lead independent director as sufficient when a company has a combined chair/CEO, so long as the lead independent director has the term of at least one year and responsibilities for providing input on agendas, call meetings of the independent directors and presides at meetings of independent directors. The guidelines now include a chart with examples how the different structures impact the leadership responsibilities with respect to board meetings, agendas and board communications.
The CA legislation and proxy guidelines make diversity on boards urgent. The new Senate Bill No. 826 law requires domestic general corporations or foreign corporations that are publicly held corporations, as defined, whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California to appoint at least one woman to their board of directors by 2019, and no later than the close of the 2021 calendar year, the bill will increase that required minimum number to 2 female directors if the corporation has 5 directors or to 3 female directors if the corporation has 6 or more directors, depending on the size of the firm. The bill allows California's Secretary of State to fine violators $100,000 for the first offense.
3) CALPers - How to accelerate gender diversity on boards
Board diversity helps to draw in and motivate talented employees. As Genpact’s Tiger Tyagarajan explains, “To attract the best talent into the company, you need to appeal to 100 percent of the top talent, not 50 percent. To do that, you need strong female role models.”
Boards that represent the customer base have better intuition. For retailers in particular, the reality is that women make up more than half of global purchasers. Board diversity is simply better business.
A diverse board boosts decision-making quality. As Scott Anderson, chairman, president, and CEO of Patterson Companies, states, “The quality of discussions goes up dramatically when you have a more diverse group in the boardroom.” Rodney McMullen, chairman and CEO of Kroger, adds that “you get questions from perspectives that you hadn’t thought of before, and I think this helps you avoid more blind spots.”
4) Other useful links to the research that shows WHY companies perform better when women are on their boards
Women hold just a small number of corporate board seats. In 2015, the 2020 Women on Boards Gender Diversity Index of Fortune 1000 companies showed that 17.9% of corporate directors were women. This is a small number when you consider that: women comprise about half of the total U.S. workforce; hold half of all management positions; are responsible for almost 80% of all consumer spending; and account for 10 million majority-owned, privately-held firms in the U.S., employing over 13 million people and generating over $1.9 trillion in sales.