Tag: boardrooms

California law mandates diversity in corporate boardrooms

Assemblymember Chris Holden called it a “big step forward for racial equity.”

California’s governor signed a bill into law on Wednesday that requires publicly traded companies headquartered in the state to have at least one board member from an “underrepresented community” by the end of 2021.

The legislation defines “underrepresented” as a person who self-identifies as Black, Hispanic/Latino, Asian, Pacific Islander, Native American (including Native Alaskan or Hawaiian) or an individual who self-identifies as gay, lesbian, bisexual or transgender.

“The new law represents a big step forward for racial equity,” California Assemblymember Chris Holden, who co-authored the AB 979 bill, said in a statement. “While some corporations were already leading the way to combat implicit bias, now, all of California’s corporate boards will better reflect the diversity of our State.”

Holden called the new law a “win-win as ethnically diverse boards have shown to outperform those that lack diversity.”

PHOTO: A diverse group of business people are shown in a large modern meeting room in an undated stock image.

A diverse group of business people are shown in a large modern meeting room in an undated stock image.

A diverse group of business people are shown in a large modern meeting room in an undated stock image.

Assemblymembers Christina Garcia and David Chiu, who co-authored the bill with Holden, echoed Holden’s sentiments after the bill was signed by Gov. Gavin Newsom.

Garcia said that it is “clear we can no longer wait for corporations to figure it out on their own.”

“I’m excited this bill is signed and look forward to California continuing to lead the way in our fight for racial equity in general,” she added in a statement.

Chiu, who is also the chair of the Asian Pacific Islander Legislative Caucus, noted that the new measure “recognizes that including the perspectives of underrepresented groups in leadership roles will result in more innovation, improved productivity, and better economic outcomes.”

The new legislation also requires corporate boards in California to include two directors from underrepresented communities if their board has more than four members and three directors from underrepresented communities if their board has more than nine members by the end of 2022.

The police killing of George Floyd at the end of May sparked a new push for racial equity in the U.S., especially in the private sector. Many companies that publicly pledged support for the Black Lives Matter movement in the wake of the protests that erupted across the nation faced renewed scrutiny over diversity statistics, especially among leadership positions.

White board members made up 83.9% of total board seats on Fortune 500 companies in 2018, according to a report from Deloitte and the Alliance for Board Diversity. Black board members accounted for just 8.6% of those seats, Hispanic/Latino members just 3.8% and Asian/Pacific Islanders just 3.7%.

Separately, earlier this month, more than a dozen companies across the nation signed onto the “Board Challenge,” pledging to add a Black director within the next year.

In June, Reddit co-founder Alexis Ohanian announced he resigned from his company’s board to make

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New California law will require more diversity in corporate boardrooms

A new bill was signed into law on Wednesday in California that will require more diversity within corporate boards of executives.

The law, AB 979, comes as renewed Black Lives Matter protests highlight the socioeconomic gaps and marginalization Black Americans endure as compared to their white counterparts.

The Los Angeles Times reports that Gov. Gavin Newsom (D) signed the bill in an online ceremony, and noted that the law is vital to increasing diversity in company employment.


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About 625 publicly held corporations located in California will be subject to the law, and must include at least one person from a minority or underrepresented background by the end of 2022. 

By the end of 2021, the same publicly traded companies headquartered in California must have one director from an underrepresented background. 

Boards with membership between four to nine members must have at least two people from underrepresented backgrounds, whole executive boards with over nine members must have at least three minority board members. 

More appointments are required over the years the company is still in business.  

“When we talk about racial justice, we talk about empowerment, we talk about power, we need to talk about seats at the table,” Newsom said.

The Times notes that the law is likely to be challenged in court by some groups, particularly in regards to the “quota” the law establishes.

“It’s a quota, and quotas are unconstitutional,” Thomas Fitton, president of Judicial Watch, told reporters. In 2028, Fitton and his organization sued the state after passing a similar law mandating a certain number of women be on executive boards.

Fitton said his organization is reviewing the new law before deciding whether to go to court.

“We are deeply concerned about the new legislation,” he told reporters. “It’s a violation of the equal protection clause of the U.S. Constitution. It undermines the core legal concept of equal protection.”


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Conversely, legal experts say that the new bill isn’t in any legal danger, citing Assembly Bill 979, publicly held corporations headquartered in California are required to have at least one director from an underrepresented community by the close of 2021.

An underrepresented group here is defined as identifying as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native.

Sexual orientation is also taken into account, including self-identifying gay, lesbian, bisexual or transgender individuals.

Current statistics on executive board diversity are bleak; a study from the Harvard Law School Forum of Corporate Governance found that 80.7 percent of board seats of Fortune 500 companies are occupied by white

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Newsom signs law mandating more diversity in California corporate boardrooms

Many California corporations will have to increase the diversity of their boards of directors under a new law signed Wednesday by Gov. Gavin Newsom to address a shortage of people of color in executive positions.



Gavin Newsom wearing a suit and tie: Gov. Gavin Newsom has acted on a bill requiring more diversity on corporate boards in California. (Rich Pedroncelli / Associated Press)


© (Rich Pedroncelli / Associated Press)
Gov. Gavin Newsom has acted on a bill requiring more diversity on corporate boards in California. (Rich Pedroncelli / Associated Press)

The law requires some 625 publicly held corporations headquartered in California to include at least one person from an underrepresented community by the end of next year, with additional appointments required in future years.

Newsom said during an online signing ceremony that the law is necessary to promote diversity in corporate boardrooms as part of a broader effort to improve racial equity in the U.S.

“When we talk about racial justice, we talk about empowerment, we talk about power, we need to talk about seats at the table,” Newsom said.

The new law is likely to be challenged in court by conservative groups including Judicial Watch, which sued to contest a 2018 law that required a minimum number of women on corporate boards.

“It’s a quota, and quotas are unconstitutional,” said Thomas Fitton, president of Judicial Watch, regarding the law signed by Newsom. Fitton made the same argument in a pending lawsuit about the law requiring women on corporate boards.

Fitton said his organization is reviewing the new law before deciding whether to go to court.

“We are deeply concerned about the new legislation,” Fitton said. “It’s a violation of the equal protection clause of the U.S. Constitution. It undermines the core legal concept of equal protection.”

Other constitutional law experts disagree that the measure is on weak ground, including Erwin Chemerinsky, dean of the UC Berkeley School of Law. He said the laws on the subject are unclear and will have to be decided by the courts.

“I believe that there is a compelling need to enhance diversity on corporate boards,” Chemerinsky said. “The question is whether a court will find these laws to be sufficiently narrowly tailored. Because there are few other alternatives, I think there is a strong argument that such laws are constitutional.”

Under Assembly Bill 979, publicly held corporations headquartered in California are required to have at least one director from an underrepresented community by the close of 2021.

By the end of 2022, corporate boards with four to nine members must have two people from underrepresented communities, and those with more than nine members must have at least three people from those communities.

Directors from an underrepresented community include those who self-identify as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who self-identify as gay, lesbian, bisexual or transgender.

“While some corporations were already leading the way to combat implicit bias, now all of California’s corporate boards will better reflect the diversity of our state,” said Assemblyman Chris Holden (D-Pasadena), one of the authors of the bill, on Wednesday. “This is a win-win,

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