California has a new law: more exclusively male advice

Companies based in California can no longer have fully male advice.

This is according to a new law, promulgated Sunday, which requires publicly traded state companies to put at least one woman on their board by the end of 2019 – or incur a penalty .

It also requires companies with five directors to add two women by the end of 2021 and companies with six or more directors to at least three other women by the end of the same year.

This is the first law of its kind in the United States, although similar measures are common in European countries.

The measure was passed by the State Legislature of California last month. And it was promulgated Sunday by Governor Jerry Brown, along with many other bills aimed at "protecting and supporting women, children and working families," the governor's office said in a statement.

According to a PwC study, a majority of businesses in the S & P 500 have at least one woman on their boards, but only about a quarter have more than two.

Senator Hannah-Beth Jackson told The Wall Street Journal last month, when the law was passed, that "a quarter of California's publicly traded companies still do not have a single woman within of its board of directors, despite numerous independent studies showing that their board is more profitable and productive ".

"With women representing more than half of the population and taking over 70% of the buying decisions, their understanding is critical to the discussions and decisions that affect the company culture, the actions to be taken and the profitability, "she said.

Some see the California law as a crucial step in establishing greater parity in corporate leadership.

But setting quotas may be controversial, said Vicki W. Kramer, lead author of the 2006 study, "Critical Mass on Corporate Boards," on CNN last month. Opponents argue that quota pressure will lead to unqualified female members and potential discrimination against male candidates.

However, when quotas are not defined, companies may not diversify their ranks. She referred to more ambitious legislation in other states, such as Pennsylvania, where a resolution of 2017 invited both public and private companies to have at least 30 percent women on their boards. the best numbers will not follow.

Kramer said the California legislation was weak compared to Norwegian laws and other European countries, which require a certain percentage of women in boards of directors. For large Norwegian companies, the law requires that women account for up to 40% of the board of directors.

CNNMoney (New York) First published on September 30, 2018 at 18:32 ET