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Seeking gender balance in the boardroom

October 7, 2018

California has enacted a first-of-its-kind law to tackle the lack of women on boards of directors of publicly traded companies based there. Similar underrepresentation persists in boardrooms in Connecticut.

The Golden State last week became the first to require that public companies include women on their boards, a mandate that supporters have said would help firms to cultivate fairer and more hospitable work environments. Equivalent legislation is not yet on the table in Connecticut, but lawmakers and corporate leaders agree that pursuing more gender balance should be a top governance priority for companies in a state where women account for no more than one third of any Fortune 500 firm’s board seats.

“I think the California law is great, and I’d love to see something similar in Connecticut,” said Fran Pastore, CEO of the Stamford-based Women’s Business Development Council. “In the last year, we’ve seen the negative outcomes than can occur when you don’t have inclusive and diverse leadership teams and boards.”

A push for more representation

Reflecting the #MeToo movement’s campaign against pervasive sexual misconduct and gender discrimination, the California state legislator who championed the new mandate said having more women in leadership positions could help reduce sexual assault and harassment in the workplace.

About 25 percent of public corporations headquartered in California do not have any women on their boards of directors.

“This is one of the last bastions of total male domination,” said California state Sen. Hannah-Beth Jackson. “We know that the public and business are not being well-served by this level of discrimination.”

The new law mandates at least one female director on the board of each California-based public corporation by the end of next year and up to three by the end of 2021.

A number of European countries, including France and Norway, have similar mandates.

In Connecticut, women are also underrepresented in the upper echelons of public companies. They account for no more than one-third of the board members of any of the 16 companies based in the state that made this year’s Fortune 500 list.

United Rentals, Synchrony and The Hartford are the firms with one-third female representation. Two companies currently have a chairwoman: Stamford-based United, the world’s largest equipment-rentals company, and Norwalk-based Frontier Communications.

Jenne Britell, an adviser with Manhattan-based Brock Capital Group and former executive vice president at GE Capital, has served as United’s chairwoman since 2008.

“A board with diversity has an expanded perspective, and it enhances the tendency to foster diversity throughout an organization,” Britell said. “A diverse board is going to encourage a company’s leadership to ask different kinds of questions, such as why there aren’t more women and minorities in a company, especially in leadership positions.”

Among the Connecticut Fortune 500 group, Stamford-based Charter Communications lags, with only woman on its board of 14.

Messages left for Charter Communications were not returned.

Model for Connecticut?

State Sen. L. Scott Frantz, R-Greenwich, said he would be willing to discuss with his fellow co-chairpersons of the state Legislature’s Commerce Committee the development of incentives such as tax credits to help increase the number of women in public companies’ governing positions.

“Increasing the number of women on corporate boards is an excellent idea,” Frantz said. “However, I would have liked to see California use incentives, instead of law with required minimums, to achieve something that is eminently possible in the private sector.”

Alex Bergstein, the Democratic nominee for the 36th District Senate seat held by Frantz, gave a similar assessment. She pointed to findings by consulting firm McKinsey & Co. and other researchers showing that the presence of women on boards and in executive positions generally improves businesses performances.

“Women don’t need data to understand why this is true. Unfortunately, some male-run companies still refute the data,” Bergstein said. “So a statute that starts the process is helpful. Let’s remember the law only requires one woman on the board, which is hardly a major overhaul. This should not be controversial at all.”

State Rep. Caroline Simmons, D-Stamford, also a co-chairwoman of the Commerce Committee, described the California law as an “encouraging step towards improving gender diversity on corporate boards, which I believe is essential to economic growth.” Companies with more women on their boards perform better, are more collaborative and innovative, and better respond to female consumers’ needs, she said.

No Connecticut legislators have committed to developing such legislation in next year’s session, but any who did would likely face skeptics. Opponents of the California mandate, such as the California Chamber of Commerce, argued that companies should determine their boards.

The California law would fine companies $100,000 for a first violation and $300,000 for subsequent infringements. It also requires companies to report their board composition to the state and would levy a $100,000 fine if a company did not comply.

“I would back comparable legislation here, though I would expand the size/penalty range for violators; $100,000 to $300,000 is a pittance for most major firms,” said Megan Cassano, the Green Party nominee for the 36th District Senate seat. “I would also explore mandating cooperatives or ‘open-book’ management practices, emphasizing employee-driven models as a prospect for making the workplace more gender equal.”

Messages left for Republican Barry Michelson, the Republican nominee for the 144th District seat, were not returned.

Moving forward

Britell said she was optimistic the California law would help foster greater diversity, but also noted that boards can take steps on their own to become more heterogeneous.

“There are many paths to the boardroom, so there is not only one way of demonstrating skill sets,” Britell said. “I’m hopeful that the California law will encourage boards to look at backgrounds that are different from ones that have been looked at in the past. If we look at the criteria for board positions and expand them, not diminish them, we will get more diverse groups.”

The lack of women in leadership positions in the corporate world is hardly confined to the boardroom. Only 4 percent of this year’s Fortune 500 companies have a woman CEO. Synchrony is the only Connecticut company on the latest list with a female chief executive. Margaret Keane has led the firm since it was spun off in 2014 from GE.

“This law is great, but the work does not end there,” Pastore said. “There have to be foundations put in place — including mentoring and networking and flexible working schedules — to support women throughout every organization. We have to change how we view and value work.”

Includes reporting from the Associated Press.

pschott@scni.com; 203-964-2236; Twitter: @paulschott

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