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Newsom signs law mandating more diversity in California corporate boardrooms

By Patrick McGreevy, Los Angeles Times on

Published in Business News

By that date, only 4% of California-headquartered companies had all-male boards, down from 29% as of June 30, 2018, according to a June study by Annalisa Barrett, senior advisor for the KPMG Board Leadership Center.

Opponents say California does not have power to dictate the selection of board members to firms incorporated in Delaware and other locations outside California, even if their headquarters are in the Golden State.

"Limiting a person's opportunity based solely because of their skin color, sex, or sexual orientation is the thing we should be trying to avoid, yet AB 979 requires exactly that," said Anastasia Boden, a senior attorney at Pacific Legal Foundation.

Corporate attorney Keith Bishop also warned that the new law, when coupled with the 2018 requirement, will have the unintended consequence of hurting participation by men and non-binary persons on board.

"Publicly held corporations will be required to comply with both sets of quotas," he said in a letter to lawmakers. "Therefore, individuals who self-identify as both female and as African American, Hispanic, or Native American will undoubtedly be preferred as director candidates because they will satisfy both quotas."

 

However, the new law is supported by the California Hispanic Chambers of Commerce, which noted that a recent study by the Latino Corporate Directors Assn. determined that 233 of the public-company boards in California have no members from underrepresented communities.

"Greater boardroom equity that is inclusive of Latinos will lead to greater results for business and our state," the chamber said in a statement to legislators.

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