Hawaii might set quota for male directors at public companies
After a California judge struck down a state law requiring women on boards, Hawaii is trying a different tack: Set a quota for male directors, too.
Under the measure proposed in January, every Hawaii-based company would need at least one female or nonbinary director and one male or nonbinary director on its board by the end of this year. By late 2025 the mandate would expand to three women or nonbinary members and three men or nonbinary members.
Companies could be fined as much as $5,000 annually for violating the law and $500 for failing to report information on board diversity.
The legislation was introduced by Rep. Amy Perruso (D, Wahiawa-Whitmore Village-Mokuleia).
Hawaii’s proposal comes as investors pressure companies to improve gender diversity on boards, part of a larger push to increase the representation of women and people of color in the corporate world. Progress in the U.S. has been spotty: The pace of women gaining seats on S&P 500 boards slowed dramatically in 2022, signaling that parity with men may still be almost a decade away. Still, women ended the year with a record 32% of seats.
So far, the only U.S. gender-diversity board mandate to become law has failed. A 2018 California measure required publicly traded companies based in the state to have at least one woman on the board by 2019 and for most companies to have three by 2021, with no minimum for male directors. But a state judge overturned that law in 2022, saying it violated the equal protection clause of California’s constitution. The ruling is under appeal.
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It’s not clear whether Hawaii’s proposal will pass the constitutional test if it becomes law. But Darren Rosenblum, a professor at McGill University in Quebec, said the approach is similar to mandates already in effect in Europe, including a Norwegian law that sets both a floor and a ceiling for men and women on the board.
“The idea is not a quota for women, but gender balance,” Rosenblum said. “Almost every other large economy has some sort of mandate for diversity on boards. The U.S. is sort of an outlier.”
The Hawaii bill, if passed, would have a much smaller impact than California’s. There are only 22 public companies based in Hawaii, none of which are in the S&P 500, data compiled by Bloomberg show. Among those companies, half have at least one woman on the board, and four appear to have only male directors.
