A bill has been introduced in the Oregon Legislature that would require a certain number of board seats of publicly traded companies, with principal offices in Oregon, be filled with women and people from underrepresented communities.
It’s similar to bills passed in California. The first was in 2018 that required a minimum number of women on public company boards, the second passed last year and set a requirement for representation from underrepresented communities.
Data collected from California’s 2018 bill shows that it has drastically increased the representation of women on boards. In 2018, 180 of 650 public companies in that state had no women on their boards. That number shrunk to 15, according to a 2020 report.
“There are women and people from underrepresented communities on boards but not enough,” said Trish Garner, state public policy chair for American Association of University Women of Oregon, the group pushing the proposal. “And we want to make sure that any corporate board member in that category isn’t a lone ranger and that their advice is truly valued. By building greater numbers, that advice will be heard.”
AAUW Oregon has branches across the state and about 1,300 members. The group started developing this bill proposal following the 2018 bill in California, Garner said. The group was previously part of the work in 2017 with Family Forward to pass the Equal Pay Act, and in the last long session it pushed to have the Oregon Department of Education fund at least one full-time employee to handle Title IX requirements.
The Oregon proposal, HB 3130, not only establishes minimum representation it also says a person can’t be counted twice for meeting the minimum requirements.
Chief sponsors of the bill are Reps. Karin Power of Milwaukie, Janelle Bynum of Clackamas and Sen. Deb Patterson of Salem. Regular sponsors of the bill are Rep. Maxine Dexter, of Portland; and Sen. Lew Frederick, of Portland. All are Democrats.
As written, the bill proposes minimums based on board size. For a board that has four or fewer members it must have at least one female director and one director who is a member of an underrepresented community. The bill defines female as someone who identifies as other than male.
For boards that have nine or more members there must be at least three female directors and three directors who are members of an underrepresented community and together those members must be at least half the board.
The bill requires companies to submit a report to the secretary of state to fulfill these requirements. Companies in violation would face a $100,000 fine for failing to file the report with the state and $100,000 for failing to meet the representation requirements. If a company fails to meet the representation requirements a second time the fine would be $300,000.
According to AAUW, California was the first state to legislate board representation and 11 other states have passed or are considering legislation. The group notes that in 2019, only 21% of board seats were held by women.
Research from the group 50/50 Women on Boards, which tracks board level representation, found that only 5% of the Russell 3000 companies nationwide are gender balanced.
The numbers for underrepresented communities is worse. Research from Institutional Shareholder Services found that underrepresented ethnic groups are 40% of the U.S. population but only 12.5% of corporate boards.
Corporate boards have been a focus for diversity and inclusion measures because the board of a company wields power to oversee the executive team and strategy. Studies have also shown that companies with diverse leadership perform better.
“Diversity in the corporate boardroom is not only fair it’s also good for business,” Garner said. “Oregon needs to do better.”
Originally printed in the Portland Business Journal, Feb 2, 2021
Date: 2021-02-03 07:48