In the 1990s, Betsy Berkhemer-Credaire noticed something that bothered her.
As she worked at her downtown-based executive recruiting firm, Berkhemer Clayton Retained Executive Search, she realized just how few women served on the boards of directors of publicly traded companies. She would spend years advocating for more gender parity among company directors — through a nonprofit called 50/50 Women on Boards that she now heads — before becoming a leading voice behind a state law requiring a certain number of women be appointed as directors for California-based companies.
“It’s the ultimate goal of one’s career, that you want to be in the circles of running companies and handling governance of companies,” she said. “There’s no reason that women couldn’t be in that realm.”
Eventually, the state passed a law, SB 826, that gave her goal some teeth. However, a legal challenge to that law saw it overturned as unconstitutional last year. Berkhemer-Credaire and other advocates await an appeal to that ruling, with the next hearing scheduled for August. Meanwhile, Berkhemer-Credaire will continue her work through 50/50 doing what she’s spent years doing — showing companies and their investors why including women in leadership benefits them.
“The message got out across the board, and because of investor pressure they started to put more women on the boards, because they know the research is true and they want their investments to be more profitable,” she said.
SB 826, passed in 2018 and signed into law by then-Gov. Jerry Brown, mandated that, by the end of 2021, companies whose stocks are publicly traded and that have at least six directors should have three women on their boards, while those with five directors should have two women and those with four or fewer should have one. Those with larger boards – such as seven or nine – must have three.
The statute included a trove of studies indicating that companies with women on their boards had stronger stock performances and profit growth; it also found that those companies carried less debt and held up better during recessions. The text also indicated that, without a mandate, the state would take another 40 or 50 years to achieve gender parity.
“The thing that’s really interesting is hearing from men say they didn’t want a woman on the board, but when they did get one they were so impressed and felt they added so much value to the board that they went and looked for another one to add,” Berkhemer-Credaire said.
Around a third of the directors of publicly traded companies in California are women — ahead of the national average of roughly 29%.
“It’s a far cry from 10% in 2010,” Berkhemer-Credaire said, “but it’s nowhere near close to 50%, which is our goal.”
Shortly after the law was enacted, however, the conservative activist organization Judicial Watch sued California for alleged violations of equal protection clauses in the state and federal constitutions.
An examination by law firm O’Melveny & Myers in 2018 reached a similar conclusion, highlighting that the state’s own legislative analysis concluded the law could be “difficult to defend” on equal protection grounds because it specified a gender-based quota.
Last May, Los Angeles County Superior Court Judge Maureen Duffy-Lewis agreed, ruling the law unconstitutional and writing that the state failed to prove the law was “necessary” to improve the state’s economic performance and could not provide evidence that a company discriminated against a woman in a way that violated the law. The state appealed, and the next scheduled event on the docket is the state’s response to the other parties’ arguments.
Third, not half
According to data compiled by 50/50 Women on Boards, companies based in Los Angeles County line up with the state in terms of having the number of female directors.
The city of Los Angeles has 27 publicly traded companies, which have a total of 75 women directors — an average of 32%. Other cities hosting companies with women on their boards include Santa Monica, with seven public companies and 21 women directors (36%); Beverly Hills, with three companies and 10 women directors (29%); Pasadena, with five companies and 16 women directors (39%); Calabasas, with two companies and six women directors (34%); Glendale, with three companies and 12 women directors (35%); Long Beach, with four companies and nine women directors (25%); and Torrance, with three companies and nine women directors (33%).
Two cities — Burbank and Rosemead — have gender balance, according to 50/50. At The Walt Disney Co. six of its 12 directors are women, and at Edison International, five of the 11 directors are women.
Berkhemer-Credaire observed that, when the law was passed, companies often turned to advisers such as their accountants, bankers or attorneys for recommendations on women board candidates.
“The first year, 2019, I thought that search firms would be doing a lot of searches — not the case,” she said. “What happened is that boards called their trusted allies to say, ‘We’ve got to get a woman on this board. Do you know one who will fit into our environment?’”
With that in mind, for those companies lacking parity, 50/50 is here to help.
Perhaps anticipating claims that it was difficult to identify a strong candidate who was a woman, the organization recently published its list of 50 Women to Watch for Boards, complete with profiles of each woman on the list. In fact, there were so many nominees — more than 400 — that the organization also published a similar list of the 50 semifinalists.
“There are more women who are qualified to serve on corporate boards than board seats exist right now,” Berkhemer-Credaire said. “That’s part of our strategy, to show that there are countless women qualified for service on corporate boards.”