Bill mandates more women on Hawaii corporate boards

A bill that would require publicly traded corporations that are based in Hawaii to include women on their boards of directors is advancing in the state Senate, but is getting pushback from some business advocates.

Senate Bill 2636 would require that each publicly held corporation that has its “principal executive office” in Hawaii have at least one female director on its board by the end of this year.

The bill would then expand the requirement that the boards diversify by gender by the end of 2022. After that date, each board with six or more members would need to have at least three women directors, and boards with five directors would be required to have a minimum of two women directors.

Companies would be allowed to increase the total number of directors on their boards to meet the new requirements, but the state Department of Commerce and Consumer Affairs would have authority under the new law to impose fines of $100,000 on companies that fail to comply with the new requirement. The fine would be $500,000 for repeat offenders, according to the bill.

Senate Commerce, Consumer Protection and Health Committee Chairwoman Rosalyn Baker said that “at the very least, if that’s a policy, then it says to the corporate boards that are out here, ‘You need to have a more diverse board.’ ”

Baker said she has discussed the issue with representatives of some of the boards in Hawaii and “they’re already there, so I don’t think it’s that difficult.”

“Women are at least half of the population, maybe a little bit more depending on which area you’re in, which means half of the brain power is going to be excluded if they’re not brought in to sit on these boards,” said Baker. “Some of these boards are making significant contributions and decisions about the economy (and) how their company and ultimately others in the community are going to be able to move forward.”

The Grassroot Institute of Hawaii, which was founded by Libertarian activist Dick Rowland, mocked the bill in a newsletter circulated last month as an example of lawmakers’ “urge to regulate every element of our lives.”

The bill uses gender equity as justification for “imposing a quota” of female directors on the boards, wrote Grassroot President Kelii Akina, adding: “I’ll let you be the judge of whether this law would be more likely to achieve gender equality or chase executive offices out of the state.”

Staff for state Attorney General Clare Connors warned that requiring corporations to have minimum numbers of women on their boards creates “an explicit gender-based classification” and may run afoul of the equal protection clauses of the U.S. and Hawaii constitutions.

California is now being sued after the state passed a similar law, and the attorney general’s office suggested that the state could use a different approach to pushing for the diversification of boards.

“For example, the mandate of a certain number of female directors could be changed to a mandate for a certain number of directors whose gender is different than that of the remaining directors on the board,” according to the attorney general’s written testimony.

Senate Judiciary Chairman Karl Rhoads, who introduced the bill, said he plans to incorporate that idea into the bill.

Despite decades of trying to achieve gender equity in the workforce, “we’re just not there, we’re not even close to being there, and that’s the frustration,” he said. Some lawmakers believe that “maybe more direct steps need to be taken.”

“Part of the issue there is if you don’t have the experience being on a board, then it’s harder to get put on the board,” he said. “You sort of have to make that initial breakthrough, and once you have, I would be hopeful that from that point it would sort of work itself out,” he said.