Calif. mandates female representation on public company boards

A quick check of restaurant companies based in the state shows most would be out of compliance by the end of 2021 unless they make additional appointments.
Photograph: Shutterstock

Public restaurant companies headquartered in California will be required to include at least one woman on their boards of directors under a measure signed into law Sunday.

The legislation mandates that one seat on the board of any public company based in the state be occupied by a woman by the end of 2019. The minimum number rises to two female directors by the end of 2021 if a public concern has five seats on its board, and to three women if the board includes as least six people.

Companies that fail to comply will be subject to fines, though the amounts and specific conditions under which they can be levied have yet to be determined.

The measure is intended to foster opportunity for women and improve the performance of public companies within the state, thereby stimulating the economy and providing better returns to California-based institutional investors such as the huge retirement fund of state workers, known as CalPERS. Its proponents cited a number of research reports that found companies with female representation on their boards tended to significantly outperform the marketplace as a whole, sometimes by as much as 45%.

But the measure is controversial because it calls for state intrusion into the inner sanctum of a corporate board room, where a direct tie to the public good is not obvious.

Gov. Jerry Brown noted the controversy in his comments to legislators upon signing the bill into law, and raised the possibility the requirement may never be enforced because of the problems.

“There have been numerous objections to this bill and serious legal concerns have been raised,” the governor said in a letter to members of the state Senate. “I don’t minimize the potential flaws that may indeed 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.”

Brown was apparently referring to the high drama of a few days earlier, when a professor of a California university, Christine Blasey Ford, testified that she had been sexually assaulted by Supreme Court nominee Brett Kavanaugh.

A quick check of restaurant companies headquartered in California shows most have a woman on their boards already, but would need to appoint at least one more to meet the 2021 threshold. The Cheesecake Factory, for instance, has a seven-seat board, and only one director, Pie Hole CEO Edie Ames, is female.

Dine Brands Global, the parent of Applebee’s and IHOP, has two female directors on its nine-person board. BJ’s Restaurants has one woman among its nine directors, as does Chipotle Mexican Grill, which recently moved to California.

Three of Jack in the Box’s nine directors are women.

See related: Why aren't there more women CEOs?

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