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Cytori Therapeutics declares as part of its mission statement: “We are an agile company that embraces big challenges.”
One big challenge Cytori has not yet overcome is the one presented by SB 826, the state law passed last year requiring publicly held corporations based in California to have at least one woman on their boards of directors by the end of 2019.
Cytori Therapeutics has no women on its four-member board. It’s not alone. A Voice of San Diego analysis of San Diego-based corporations identified more than 20 that don’t yet have a woman on their boards.
A report released last week by the California Secretary of State shows that as of July 1, only 184 out of 537 publicly traded California general corporations or registered foreign corporations currently have at least one woman on their boards.
An even bigger list of companies could find itself out of compliance with the law beginning in 2021, when another provision kicks in requiring companies to have at least two women on their boards if the board has at least five members, and at least three women if the board has six or more members. VOSD has identified at least 27 San Diego-based companies that have just one woman on their boards and would be required to add at least one more by 2021.
State Treasurer Fiona Ma recently launched a new registry for women interested in serving on boards, where they can upload their resumes to make it easier for corporations seeking certain skill sets to find them.
Ma said in a statement that the secretary of state’s report “shows we still have a long way to go to bring gender parity to the board room.”
San Diego Has the Highest Rate of All-Male Boards
San Diego has long been at the epicenter of the corporate board diversity problem.
A 2018 report written by University of San Diego business professor Annalisa Barrett found that 44 percent of companies headquartered in San Diego had no women on their boards – the highest percentage of any county in the state.
“San Diego also has the lowest prevalence of women in the boardroom,” the report said. “Fewer than one in eight (12%) of the board seats of San Diego companies are held by women.”
Dan Eaton, a lawyer and a lecturer at San Diego State’s Fowler College of Business, said he’s not surprised that there’s a large number of companies that don’t yet comply with the law, five months before the deadline kicks in.
“These sorts of things do take time,” he said. “The deadline will concentrate the mind in a way that having a whole year to comply will not.”
The disparities in San Diego are fueled in large part by biotech companies.
I reached out to more than a dozen of the San Diego companies with all-male boards of directors. None was willing to speak on the record.
A spokesman for Neurocrine Biosciences Inc., declined to make anyone available for an interview, but emailed this statement: “We value diversity at Neurocrine Biosciences and are exploring opportunities to enhance the diversity of our board of directors, including the active engagement with a search firm to fulfill on this important value for our company.”
A spokeswoman for Immunic Inc. initially said the chairman of the board would be available for an interview, then canceled. An official for the company noted that because it intends to move its U.S. headquarters to the East Coast, the law would not apply to it there.
A spokesman for Maxwell Technologies declined an interview request by noting that because the company recently merged with Tesla, it was no longer public and thus, no longer subject to the law.
A handful of San Diego-based companies, however, have recently added a woman to their boards.
MaxLinear, Fate Therapeutics and American Assets Trust have each added a woman to their boards over the last year.
Everyone Likes Diversity, Few Like Mandates
A common argument from opponents of SB 826 is that they agree with its overall goal of boosting diversity on corporate boards, but don’t believe government mandates are an appropriate way to achieve it.
“Gender is an important aspect of diversity, as are the other protected classifications recognized under our laws. … Our companies are not focused on only one particular classification, but rather all classifications. We believe this comprehensive approach is more productive in addressing diversity than a mandated quota that only focuses on one aspect of diversity,” a coalition of the law’s opponents led by the California Chamber of Commerce noted in an analysis of the bill.
Gov. Jerry Brown seemed to simultaneously agree and disagree in his signing message for the bill. He acknowledged that the law might not withstand a legal challenge, but said because corporations enjoy special privileges, it was appropriate to require them to acknowledge half the population.
“There have been numerous objections to this bill, and serious legal concerns have been raised,” Brown wrote. “I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation. Nevertheless, recent events in Washington, D.C. — and beyond — make it crystal clear that many are not getting the message.”
Despite the distaste many companies have for government requirements, it’s also clear that professing a commitment to diversity – or passing less forceful measures encouraging diversity – isn’t accomplishing the goal. As Vox noted, only 20 percent of companies complied with a nonbinding 2013 state resolution urging companies to include more women on their boards by 2017.
A legal challenge could still materialize.
Moving Forward
SB 826 allows the secretary of state to impose fines of $100,000 on companies that fail to report their information, and that fail to meet the law’s requirements. Companies that commit multiple violations could be hit with a $300,000 fine each time.
But it’s still unclear how aggressively the law will be policed.
Eaton, the SDSU professor, said he doesn’t think it’s likely that every company without a woman on its board will be hit with a fine once the law goes into effect.
“The secretary of state, which has limited resources, will likely select several companies as test cases and issue fines. This is the first year of operation, after all,” he said.