By Anne Sherry, J.D.
The Secretary of State of California released its second report on gender diversity in public companies headquartered in the state. Of the 330 affected corporations that filed a 2019 disclosure statement by the end of 2019, 282 reported having at least one female director. California’s board diversity law made this degree of diversity mandatory for all public companies by December 31, 2019, and a greater female presence will be required on larger boards by the end of 2021.
The Secretary of State’s first report examined state disclosure statements and SEC filings for the first half of calendar year 2019 and found that as of July 1, 2019, 173 companies had at least one female director. For this second report, the Secretary of State combined data for July through December with the information from its report for a full year of data, bringing the number of gender-diverse boards up to 282. It bears emphasizing that California is on an annual reporting cycle and that these numbers all relate to the same year. Nevertheless, Secretary of State Alex Padilla seemed to interpret the numbers as showing an uptick, saying, "We are excited to see the increase in publicly held corporations adding women to their boards. We look forward to analyzing the data that we have collected to date."
It should also be noted that a corporation’s deadline for filing the corporate disclosure statement is 150 days after the end of its fiscal year; therefore, many corporations whose fiscal year ended in the last five months of the year may not be included in the report. The report indicates that 625 corporations are subject to the diversity law but that only 330 had filed a 2019 disclosure statement. The report also includes data from SEC filings, which are on a different timeframe that may contribute to further gaps in the data. It would not be surprising if future reports show a higher degree of compliance with the diversity law, which only became compulsory on December 31.
The Secretary of State has also begun collecting data on companies’ delisting and on the movement of companies’ headquarters in and out of California. The 2021 report will examine this information.