Corporate Board Diversity on the Rise in Southern California
In recent years, companies across the country have learned that diversity in the workplace and the boardroom is more than just a want, it’s a must
To compile a list of companies with the most diverse boards, L.A. Times B2B Publishing reviewed the board composition of publicly traded companies headquartered in Southern California. The survey was limited to companies with a market capitalization of $2.5 billion or more as of September 1, 2024. And based on information filed in annual and proxy reports with the U.S. Securities and Exchange Commission, more than 50 companies met the criteria.
As a group, Southern California companies reported an average board size of 9.1 members. There was an average of 4.4 diverse board members per company, which equates to 48.6% of board members. Diverse board members encompass both women and ethnic minorities, and some people have more than one diverse characteristic. Boards average 3.1 women as members, or 34.7%, while ethnic minorities averaged 2.4 board seats, or 26.2%, of the total.
“Progress, while continuing to move in the right direction, has slowed,” said Heather Spilsbury, chief executive of 50/50 Women on Boards, a Los Angeles-based organization dedicated to gender equity on corporate boards. Spilsbury noted that California holds the top spot among all states for women on boards, although the state’s percentage fell slightly last year. She attributed the decline to some companies moving out of state or being acquired rather than fewer women serving on boards.
L.A. Times B2B Publishing presents the most diverse company boards ranked by the total diversity board members. Diverse board members include those who were self-identified as a woman or ethnic minority.
The board oversees executive compensation and has an advisory role on mergers and acquisitions, transactions and other significant business operations. Board members are chosen for their expertise with one or more specific board functions as well as industry knowledge. Gaining the necessary experience to qualify for a board role is crucial for women and minorities who seek these opportunities.
Board diversity has been an issue that companies have concentrated on over the past few years. In 2020, California passed AB 979, which required publicly held companies headquartered in California to have a minimum number of directors from designated underrepresented racial, ethnic and LGBTQ backgrounds. That spurred the addition of many diverse board members in subsequent years. However, the U.S. District Court for the Eastern District of California ruled the law unconstitutional in 2023. Its future is uncertain.
Meanwhile, the NASDAQ exchange created a set of regulations regarding reporting around board membership that was implemented in 2021. It requires companies to have at least two diverse board members or to explain why they did not meet that number. Companies must also include a board diversity matrix detailing the gender and ethnicity of their board members in company financial reports. The New York Stock Exchange did not implement similar rules regarding reporting on board diversity, but many companies have voluntarily reported the data.
Gender Imbalance
Company bylaws typically give a range for the number of board members permissible. The board is elected by shareholders, and board members typically serve for a specified period. Board members are usually independent and meet several times per year. They receive compensation in the form of cash or stock for their work. Some people serve on boards for multiple companies, and there may be limits as to how many boards a company will allow a director to serve.
Southern California Public Company Board Diversity
Average board composition for publicly traded companies headquartered in Southern California based on information filed in annual and proxy reports with the U.S. Securities and Exchange Commission. The survey was limited to companies with market capitalization of $2.5 billion or more as of Sept. 1, 2024. There were more than 50 companies that met the criteria.
The 50/50 Women on Boards organization was founded in 2010 and has a mission to advocate for women to hold 50% of corporate board seats among Russell 3000 Index companies by 2050. Additionally, they advocate for 20% of seats to be filled by women of color.
To advance its mission, it hosts strategic networking events, advocates on behalf of women through consulting work and conducts an annual survey of the gender makeup of corporate boards for the Russell 3000 Index. That report provides breakdowns by state and provides companies with benchmarking analysis. As of the second quarter of 2024, it was reported that women hold 30% of board seats for the Russell 3000.
However, the growth percentage has slowed over the past two years with the percentage increasing by just 1% in 2022 and 2023.
Nevertheless, many companies have reached gender and ethnic parity. Those companies tend to have women and minorities in key leadership positions. For those who are looking to add women to their boards, 50/50 Women on Boards curates a list of 50 women who have the qualifications to serve on a board but are not yet serving on one. They also have a directory that notes race and ethnicity. Public companies don’t list their open board seats, but they want to find candidates who are the right fit and it could take a long time to find that person.
“You don’t have to replace a man with a woman. You can add a seat. It’s about succession planning and tenure,” said Spilsbury.
- David Nusbaum