California Women on Boards: A Progress Report

Late last year, California Governor Jerry Brown signed into law SB-826, mandating every public company with headquarters in California to have at least one woman on their board of directors by the end of this year. At the time of signing, 94 companies were required to make changes this year. 

Specifically, the bill calls for:

• By end of 2019, any publicly held corporation with principal executive offices in California must have a minimum of one female director on its board. 
• By end of 2021, corporations with six directors or more must have a minimum of three female directors; if a corporation has a board of five, it must have a minimum of two female directors; if the corporation has a board of four or fewer, it must have a minimum of one female director.

Here’s where California companies are today

Athena Alliance recently ran a report on the original 94 companies affected by SB-826. Notable findings include that more than one-third of the original 94 companies are not in compliance. 36%, or 34 companies, still have no women on their boards. 

The 2019 Affected Companies—Where They Stand Today

• 11 companies still need two women. There are 11 companies on our list with boards of five. That means that they must bring on two women by 2021. Ironically, if those boards were to bring one woman on in 2019, they will need to bring two more on by 2021. However, if they wait and assume any penalties in 2019 and 2020, they only have to bring on two women in total by 2021. 
• More women by 2021, for all. Every single one of the 94 companies still needs to add at least one more woman to its board by the close of 2021. 56 of the companies need to bring on two additional women, and 21 need to bring on three.
• Healthcare and biotech are behind the curve. 39% of the companies out of compliance are in healthcare, of which 69% are in biotech.
• Followed by lags in tech and semiconductor: 31% of the companies out of compliance are in the technology sector and 46% of those are in the semiconductor industry.

The 2019 Affected Companies by Industry 

The following companies of the original 94 have made the most progress. They will need to add one more woman to meet their 2021 requirements. At that time, all will have more than 30% female directors. 

• Acacia Research Corporation (ACTG)
• DURECT Corporation (DRRX)
• American Assets Trust, Inc. (AAT)
• CareTrust REIT, Inc. (CTRE)
• Fluidigm Corporation (FLDM)
• Simulations Plus, Inc. (SLP)
• 8x8, Inc. (EGHT)
• Mirati Therapeutics, Inc. (MRTX)
• Pacific Mercantile Bancorp (PMBC)
• Tandem Diabetes Care, Inc. (TNDM)
• TiVo Corporation (TIVO)
• Cadiz Inc. (CDZI)

The following companies still have zero women on their boards, and will have fewer than 30 percent of their board seats filled by women if they do only the minimum to comply by 2021:

• A10 Networks, Inc. (ATEN)
• Adesto Technologies Corporation (IOTS)
• Arrowhead Pharmaceuticals, Inc. (ARWR)
• Enphase Energy, Inc. (ENPH)
• Heron Therapeutics, Inc. (HRTX)
• Impac Mortgage Holdings, Inc. (IMH)
• Innovative Industrial Properties, Inc. (IIPR)
• NantHealth, Inc. (NH)
• Natural Health Trends Corp. (NHTC)
• Turtle Beach Corporation (HEAR)
• Willis Lease Financial Corporation (WLFC)
• Riley Financial, Inc. (RILY)
• LiveXLive Media, Inc. (LIVX)
• FibroGen, Inc. (FGEN)
• MediciNova, Inc. (MNOV)
• Clean Energy Fuels Corp (CLNE) 

Looking ahead, we have an early snapshot; just a few weeks ago, the California Secretary of State made public its initial “Women on Boards” report. The report included the current status of all 722 companies required to bring on additional women to their boards by 2021. Only 184 companies out of 722 have reported they are in compliance with the law at this time—just 25%. 

But take note: unless you read this report carefully, you might be misled by what it is saying. It is notsaying that only 25% are in compliance, but rather that only 25% affected by the law have reported their standing for 2019. For example, if you look at the 184 companies, at the top of the list is PriceSmart, which has two women on their board (one of whom was sourced via Athena Alliance). That means they are compliant for 2019, but not for 2021 as they have a 10-person board. Conversely, Netflix did not report compliance, but are still very much compliant as they have the required three women on their board. 

That said, many of those 184 companies still have work to be done prior to the 2021 deadline. This article exclusively focuses on the 94 companies that needed to make immediate changes, from a report shared in September 2018. 

Athena is here to help you drive board transformation. 

Athena Alliance is just one organization dedicated to helping more women rise through the ranks of leadership and achieve corporate board seats. But we’re also dedicated to helping companies revolutionize their leadership. And we know change begins at the top.

We wholeheartedly believe that it’s not just about adding women to the boardroom, it’s about modernizing your board construct. That means taking a fresh perspective on the skills you need to achieve your greatest imperatives. We don’t just fast-track a company’s connections to a vast community of women who can add real value; we also guide you in thinking more holistically about your board and the skills and perspectives you have on it.

For companies (both inside and outside California) that want to secure their relevance, drive innovation, and deliver outstanding value to all stakeholders, we’re here to help. Contact [email protected] to learn more.