Despite ongoing legal challenges, California’s Gender Diversity Act of 2018 has helped propel a record number of women into board seats in the San Diego area and statewide, according to a news report. study.
Female directors of listed San Diego companies have grown from 12% to 31% of the total number of board seats since the law was passed – SB 826 – three years ago, the California said. Partners Project, an advocacy group that monitors the impact of legislation.
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Across California, women now hold 29% of public company board seats, up from 15.5% in 2018.
âI think it’s hard to argue that the law hasn’t had a significant effect,â said Olivia Morgan, executive director and co-founder of the California Partners Project. “What this shows is that companies have been able to find qualified candidates for boards of directors as they move this priority from the back burner to the back burner.”
California was the first state in the United States to require public companies to have female directors or face fines ranging from $ 100,000 to $ 300,000. Washington state also passed a gender diversity law, but it’s more limited, with no fines or exceptions for small businesses, among other differences.
A handful of lawsuits have challenged the California warrant, including one in Los Angeles Superior Court which is currently on trial.
These lawsuits claim that the law creates a âquota of womenâ in violation of the equal protection provisions of the California Constitution and the United States Constitution. At the time the law was passed, so-Gov. Jerry Brown acknowledged that this could raise “serious legal issues”.
Yet California’s 750 state-owned companies have overwhelmingly accepted the mandates of the law. According to the study, only 12 companies statewide currently have no female directors. None are based in San Diego.
To date, the Secretary of State has not fined any company for violation. Some of the fears surrounding the bill, such as that it would push companies to relocate their headquarters or that it would lead to “overboarding” where highly qualified female candidates would be forced to sit on too many corporate boards. administration, did not materialize.
Companies have reasons beyond SB 826 to diversify their boards. This is a growing drumbeat among institutional shareholders and corporate governance experts, who correlate divergent voices in the boardroom with better performance.
âThey have been an important force for progress,â Morgan said. âCalPERS, CalSTRS, Blackrock, State Street and Nasdaq now – Goldman Sachs won’t go public unless you have a woman or person of color on your board. This pressure has actually been extremely helpful.
The Nasdaq is gradually introducing new requirements that publicly traded companies must have at least two different directors – or explain why they don’t in public documents filed with securities regulators.
In July, Goldman Sachs said it would not go public with any startup that didn’t have at least two different board members, including a woman.
When initially adopted, SB 826 required companies to add a female director. But by the end of 2021, he called for increasing the number of female directors to two on five-person boards, and to at least three for boards of six or more members.
As of September, 343 state-wide companies have yet to meet the 2021 target, according to the California Partners Project. This includes approximately 35 San Diego County businesses.
But experts expect most to comply by the end of the year. âAhead of the first deadline in 2019, scores of companies announced the appointment of a female director in December,â said Annalisa Barrett, senior advisor to KPMG’s Board Leadership Program.
Most of the big companies in San Diego – Qualcomm, Sempra Energy, Illumina – already have more than one female director.
It’s small businesses, including some biotech companies, that tend to lack women on their boards, Barrett said.
âOne of the peculiarities of the California economy is that we have so many public microcap companies,â she said. “The law also applies to these companies, and I think it really raised the conversation about the benefits of board diversity among micro-capital companies.”
As of June 2018, women held only 74 of the 617 seats on the board of directors of public companies in San Diego.
As of September 30, 272 board seats were held by women out of a total of 883. Today, there are 112 local public enterprises, up from 86 three years ago.
âOne interesting thing in San Diego is that we have more than doubled the number of women on boards,â said Jessica N. Grounds, co-founder of Mine the Gap, who consults with C-Suite executives. on inclusion. “To me, this is an indication that the talent existed here and across the country for San Diego businesses to find qualified women.”
Grounds, a San Diego resident, worked on the California Partners Project study. She also researched the backgrounds of women statewide who were appointed to boards of directors after the passage of SB 826.
âWhat I found was that 39% had an MBA, well over half had experience in C-Suite, around 15% had multiple graduate degrees,â she said. âSo they were very capable people. “
Yet 62 percent had never served on a board of directors before, she said.
Experts cite several reasons why women face barriers for board appointments. Historically, companies have sought directors with P&L responsibility in public companies, so CEOs, CFOs, or heads of large business units.
âThe point is, only 7 percent of Fortune 500 CEOs are women,â Grounds said. âSo if you only look at one category, that’s pretty limiting. “
But that way of thinking has changed over the years. Now people with skills in important areas like cybersecurity, human resources, information technology, global operations, supply chain, etc. are taken into consideration, which opens the door to more female candidates.
âYou diversify the skills of your board of directors as much as you diversify the people at your board table,â said Morgan, executive director of the California Partners Project. âYou’ve seen this development in terms of ideas for best governance practices. “
San Francisco leads the state in the percentage of board seats held by women at 33 percent. San Diego and Alameda follow at 31%. Los Angeles and Orange County reached 28% and 26%, respectively.
By industry, energy / utilities rank first with 36%; followed by retail and entertainment, both at 33%; technology at 31 percent and construction at 30 percent.