The California legislature is considering a bill that would make it the first state in the US to require women’s representation on the boards of companies headquartered there, but the business community is pushing back, saying the proposed mandate is unconstitutional and counterproductive, Antoinette Siu reports at TechCrunch:
SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine. …
Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, as well as conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California. … Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.
Legislative mandates or quotas for women on corporate boards are rare, with only a few European countries having adopted them. Norway was the first to do so, introducing a 40 percent quota in 2003, while France, Germany, Iceland, and Spain have since introduced their own mandates. Sweden had an opportunity to join this group but declined it early last year, when the parliament voted down a proposal to fine listed companies where women make up less than 40 percent of directors. In these countries, quotas have proven effective at driving gender equality on boards; critics acknowledge this, but argue that making women’s representation a matter of compliance isn’t changing corporate cultures to really value women in leadership.
Massachusetts State House (Keith J Finks/Shutterstock)
After several years of legislative wrangling, Massachusetts Governor Charlie Baker on Friday signed a bill into law that will limit the conditions under which employers in the state can enforce non-compete agreements on their employees. The law goes into effect on October 1 and will apply to all non-compete agreements signed after that date. Lisa Nagele-Piazza outlines the law’s provisions at SHRM:
The Massachusetts law aims to prevent overuse of such agreements by prohibiting noncompetes with employees who are:
- Nonexempt under the Fair Labor Standards Act.
- Under age 18.
- Part-time college or graduate student workers.
For a noncompete to be valid, it must be:
- Limited to 12 months in duration (with some exceptions).
- Presented to new hires either with an offer letter or 10 days prior to an employee’s start date, whichever is earlier.
- Signed by the employer and the worker.
The agreement must also inform employees of their right to consult legal counsel before signing it. If employers want existing staff to sign noncompetes, they will need to offer “fair and reasonable” consideration beyond continued employment for the agreements to be valid.
The new law is also the first in the U.S. to require that employers offer “garden leave” pay to former employees bound by non-competes. The law requires to pay these employees 50 percent of the highest base salary they earned in the prior two years for one year after their departure, or some other “mutually agreed upon consideration.”
That alternative represents a huge loophole in the law, Michael Elkon, an attorney with Fisher Phillips in Atlanta, tells Nagele-Piazza. What sort of “consideration” counts as valid for the purposes of this law will likely be hashed out in court in the coming years, but Elkon notes that employers will expose themselves to a risk of litigation (before an unsympathetic judge) if they attempt to get around this provision by offering an employee a “consideration” that undercuts the law’s guidelines.
Workplace sexual harassment may be committed by individuals, but if and when harassers feel able to freely engage in misconduct without fear of being caught or punished, that’s a problem for the whole organization. Specifically, it speaks to a culture challenge; the organization may have policies in place designed to prevent and stamp out sexual harassment, but victims don’t feel secure in reporting because the culture discourages it. Because of that, senior leaders may not find out about a harassment problem as early as they could.
But if culture is part of the problem of sexual harassment, it is also a part of the solution—and a growing concern among directors and shareholders. In a recent blog post at the MIT Sloan Management Review, Patricia H. Lenkov, founder and president of Agility Executive Search LLC, and Denise Kuprionis, founder and president of The Governance Solutions Group, discussed some of the steps boards can take to actively manage culture so as to mitigate the extensive legal, financial, and reputational risks associated with sexual harassment. They offer up some questions directors should be asking in their dialogue with management about the organization’s policies and practices:
How do our current policies measure up to best practices?
Too often, the board does not read company policies or require human resources leadership to review policies and procedures annually to gauge the effectiveness of the reporting process. Directors may think this level of review is “stepping on management’s toes.” However, the board must determine whether the company’s current policies and procedures related to preventing workplace sexual harassment and discrimination are adequate. Asking HR how these policies are communicated and to define “best practices” is not crossing the management/board line. Directors should weigh in on whether the CEO and the management team are communicating the right message.
Do employees trust and use our procedures for reporting harassment?
While there are many methods and procedures organizations use for employees to report harassment or complaints, hotline calls to a company’s dedicated ethics line are a good example. Board directors sometimes utter a sigh of relief when they hear there have not been any hotline calls at their organization, but it’s a common misconception that few calls to the ethics line equates to a “good” company culture. In an open and trusting culture there are many calls — calls for how to handle a matter, calls for clarification, and, yes, some calls that report a potential problem. Informed directors ask how many calls are received in a given time period and require that calls be categorized. …
Bob Iger, the CEO of the Walt Disney Company, received a total compensation of $36.3 million in fiscal year 2017, if all goes well, could earn more than twice that figure this year. The company’s investors, however, have balked at the board’s plan to reward Iger so generously, voting 52–44 percent against a non-binding advisory resolution approving Disney’s executive compensation pan at its annual shareholder meeting, Bloomberg reports.
Three proxy advisors had urged investors to reject the plan, which they said was misaligned with performance, but the board insists that Iger’s compensation package is worth making sure he remains on board through the completion of Disney’s ongoing $52.4 billion deal to purchase 21st Century Fox:
“The board decided it was imperative that Bob Iger remain as chairman and CEO through 2021 to provide the vision and proven leadership required to successfully complete and integrate the largest, most complex acquisition in the company’s history,” Aylwin Lewis, head of the Disney board’s compensation committee, said Thursday.
Bloomberg notes that this is the first time Disney shareholders have pushed back on an executive compensation package since federal regulators began encouraging these “say on pay” votes in the 2010 Dodd-Frank Act. Indeed, such rejections are still a rare occurrence in corporate America generally. Just 1.2 percent of S&P 500 companies had their advisory pay resolutions opposed by a majority of investors in 2017, Reuters reports, citing data from ISS Analytics.
For the most part, America’s largest companies agree that they need more gender diversity on their boards of directors. Even those who question the bottom-line value of diversity can recognize that having more women in leadership improves a company’s public image and offers a perspective that can help them better serve their female stakeholders and customers. While corporate America has made some progress toward bringing more women into the C-suite, gender parity in corporate leadership is still a distant vision. On boards of directors, women’s representation also remains low, with some major companies having not one woman on their board.
Furthermore, getting a seat at the boardroom table is only half the battle for women’s inclusion, as Kimberly A. Whitler and Deborah A. Henrietta discuss at the MIT Sloan Management Review. According to their research, more is needed for women directors to have a real impact on corporate governance.
There are three levels to progress for women on boards, Former Xerox Corp. CEO Anne Mulcahy tells the authors: breaking in, critical mass, and gaining influence. The true power in boards lies with a handful of select committees: audit, nominating/governance, executive, and compensation. Across the Fortune 500, 58 percent of companies have at least one woman chairing a board committee, but the numbers of women leading these key groups is far lower: Only 21 percent of nominating or governance committees have a female chairperson, Whitler and Henrietta find, and just 5 percent of executive committees. Meanwhile, women hold just 6 percent of board chair positions, and in half of those cases, it’s because that woman is the CEO of the company.
Facebook announced last week that Kenneth I. Chenault, the retiring CEO of American Express, would join the social media giant’s board of directors on February 5. A 37-year employee of American Express, Chenault was appointed to the chief executive post in 2001, joining the very small club of people of color in the upper echelons of corporate America. Next month, he will become the first person of color on Facebook’s board, Hanna Kozlowska notes at Quartz, fulfilling a promise Chief Operating Officer Sheryl Sandberg had made to the Congressional Black Caucus last year that the company would soon appoint an African-American director.
With Facebook, like all of its peers in big tech, has been criticized for a lack of diversity in its workforce, particularly in technical and managerial positions. Its latest diversity report, released last August, showed modest progress, with black Americans making up 3 percent of its US workforce and Hispanic Americans 5 percent. Women now make up 35 percent of Facebook’s global workforce, 28 percent of its leadership, and 19 percent of its technical staff. Minority presence in senior leadership, however, has stagnated since 2014.
TIME magazine revealed its Person of the Year this week, granting the distinction not to an individual but rather to a group of women it calls “the silence breakers,” who have spoken up against sexual harassment in their workplaces in recent months. This includes the women in entertainment, media, and technology who exposed prominent men in their industries as serial sexual abusers; as well as the vast numbers of women who came out around the world with personal stories of sexual harassment on social media through the #MeToo hashtag campaign.
The revelation of these women’s stories, along with the growing number of famous men who have been fired from their jobs and publicly disgraced due to sexual misconduct allegations, has engendered a palpable shift in the way we as a society talk about sexual harassment and assault in the workplace. The shocking revelations of decades of sexual misconduct by Hollywood producer Harvey Weinstein in October may have been the event that triggered the avalanche of allegations and public admissions of guilt:
The response to the Weinstein allegations has shaped the way people view women who come forward. In a TIME/SurveyMonkey online poll of American adults conducted Nov. 28–30, 82% of respondents said women are more likely to speak out about harassment since the Weinstein allegations. Meanwhile, 85% say they believe the women making allegations of sexual harassment.
TIME also touches on the impact this conversation is having on gender relations in the workplace, noting that it is making men think harder (and feel some anxiety) about whether the interactions they have with their female colleagues are appropriate, and worry about crossing lines where they hadn’t before: