September 27, 2018
Activist Partner Chris Davis weighs in with The Deal on proposed California legislation mandating female directors on the Boards of California headquartered public companies, noting, “its somewhere between bizarre and insane that 50% of the U.S. population isn’t fairly represented in the boardroom.” The article entitled “California Bill Requiring Women on Boards May Face Court Battle”, discusses the proposed bill requiring California based public companies to have one or more women on their Board, depending on Board size, in future years. Covered companies failing to meet the applicable requirements could be fined.
There is increasing recognition of the benefits of having women serve as directors, but public companies are moving too slowly for the California legislature, which passed the bill by wide margins. The Deal referenced a 2017 study by MSCI which found that U.S companies with three or more female directors over a five year period had reported earnings per share that were 45% higher than companies without female directors. Featuring talented female nominees on upcoming slates may make solid business sense for activist investors in particular. “A lot of activists might wake up and say that not only is this a social good; it may help attract votes, attention, and support in future campaigns,” Davis said.