California diversity law forces companies to place at least two directors from racial or sexual minorities on their boards

Under a first-in-the-nation diversity bill signed into law Wednesday by California Governor Gavin Newsom, California-based companies must have directors from racial or sexual minorities on their boards.

Apple Park in Cupertino, California
Apple Park in Cupertino, California

Associated Press:

The diversity legislation is similar to a 2018 measure that required boardrooms to have at least one female director by 2019. Like that measure, it could face court challenges from conservative groups who view it as a discriminatory quota.

By the end of 2021, the more than 660 public corporations with California headquarters must have at least one board director from an “underrepresented community,” according to the measure.

Those who qualify would self-identify as Black, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or as gay, lesbian, bisexual or transgender.

The measure requires at least two such directors by the end of 2022 on boards with four to nine directors. Three directors are required for boards with nine or more directors. Firms that don’t comply would face fines of $100,00 for first violations and $300,000 for repeated violations.

California commissioner of corporations Keith Bishop… objected that that bill, coupled with the existing diversity law, would make it more desirable for corporations to pick women who also are members of the underrepresented communities to simultaneously meet both sets of quotas, to the detriment of men or women who do not meet the qualifications in the new bill.

MacDailyNews Take: Apple’s Board of Directors is currently comprised of seven members: Chairman of the Board, Arthur D. Levinson, and Board members James A. Bell, Tim Cook, Albert A. Gore Jr., Andrea Jung, Ronald D. Sugar, and Susan L. Wagner.

Since we’re now being forced to account for their skin color and/or gender, here are their photos:

Apple Board of Directors (left to right) Arthur D. Levinson, James A. Bell, Tim Cook, Albert A. Gore Jr., Andrea Jung, Ronald D. Sugar, and Susan L. Wagner
Apple Board of Directors (left to right) Arthur D. Levinson, James A. Bell, Tim Cook, Albert A. Gore Jr., Andrea Jung, Ronald D. Sugar, and Susan L. Wagner

Apple’s official racial, gender, and sexual orientation tally (as best we can calculate): Three (3) white assumed straight guys (don’t count), one (1) white gay guy (officially self-identified, 1 point), one (1) assumed straight black guy (no info on sexual orientation info available, however he is married to a woman who seems to identify as a woman and has two children, so he’s worth 1 point), one (1) assumed straight asian woman (no info on sexual orientation info available, however she was married to a man who seemed to identify as a man and has two children, so she’s a twofer), and one (1) woman (no info on sexual orientation info available, however she is married to a man who seems to identify as a man and has three children, so 1 point there, too.

Total points for Apple’s BoD (2 points now required under California law): 5 (1 for gay, 1 for black, 2 for asian / woman, and another 1 for woman).

Verdict: Apple’s Board is currently comfortably legal in California under this new diversity law.

Diversity is good, but getting the absolute best would seem to be the better goal. Forced diversity carries its own set of problems. Would the group be comprised of the best-qualifed people possible or would it be designed to hit pre-defined quotas? Would some members of the board, consciously or unconsciously, consider certain members, or even themselves, to be tokens meant to fill a quota?

This could also work in Apple’s and other company’s favor. Truly looking at qualified people from a larger pool could result in delivering different viewpoints and new ways of looking at things and tackling problems than a more homogenized BoD would be capable of delivering.

Regardless and of course, someday it would be nice for everyone to just be able to look at a group and only see people, not skin color and/or gender.MacDailyNews, January 9, 2014

46 Comments

  1. When the corporation does not do the right thing either by commission or omission, then it essentially invites the gov. to tell it to do the right thing and how to do it, in this case, force it to limit racial or gender disparity in the boardroom. This is good on its face. However, the quality of the person, not identity, should have primacy in the inclusion process for a Capitalist corporation in the dog-eat-dog world of competitive commerce where market forces rule. This is because choosing a leader that is not based on quality could very well degrade the quality of the company’s product and service.
    However, in the area of general governance and betterment of society, I lean in favor of inclusion based on identity in order to right past and current social wrongs which should be America’s patriotic goal.

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