The number of Latinos serving on California corporate boards of directors trails far behind other groups despite a recent law mandating that publicly traded companies diversify their leadership, according to a new report.
Latinos, who represent the state's largest ethnic group, make up 2.3% of board room seats, according to an analysis of 678 public companies headquartered in California by the Latino Corporate Directors Association.
The report shows that whites continue to make up the majority of board seats, holding 81% of the positions. Asian Americans have 10.9% of the seats, and Blacks make up 4% of California corporate directors.
"It is unfortunate," said Kathy Jurado Munoz, vice president of advocacy and demand at the Latino Corporate Directors Association. "California is not showing us the numbers that we would have liked to have seen."
Gov. Gavin Newsom in September signed legislation that mandates the appointment of diverse leaders from under-represented communities to the boards of public corporations based in California. It defined the underrepresented as people of color and those who are gay, bisexual or transgender.
The law requires corporations to have at least one under-represented director by the end of 2021. Additionally, corporations with more than four directors, but fewer than nine, would require a minimum of two diverse directors. Corporations with nine or more directors must have at least three directors from an under-represented community by 2022.
Corporations that fail to comply with the law can face harsh fines between $100,000-$300,000.
Between January and March, 15 Latinos joined the boards of directors of public companies headquartered in California, according to the analysis.
Of the 678 public companies headquartered in California, about a quarter have an all-white board, according to the report, a 5.5% decrease compared to the previous quarter. About 83.2% of those companies lack a Latino board member, a 1.4% decrease from the previous quarter.
"The math doesn't add up as to why Latinos are being left behind when California's population is almost 40% Latino," said Oswaldo "Ozzie" Gromada Meza, director of membership and research for the Latino Corporate Directors Association.
Jurado Munoz said most of the gains among people of color are coming from companies appointing more Asian Americans.
"We see upticks in the Asian American and African American communities, and we'd like to see that same uptick in our own (Latino) community," she said.
In the last 10 to 15 years, David F. Larcker, director of the Corporate Governance Research Initiative at Stanford Graduate School of Business, said women have made progress in becoming board directors, but that those gains have been "much slower" among Latinos and the LGBTQ community.
"I just think there's been more energy, more publicity around gender," he said. "Other under-represented groups are saying, 'Hey what about me?'"
The racial disparity also exists among female board members.
According to the analysis, white women account for about 20% of board seats, followed by 3.3% Asian women, 2% Black women and 1% Latinas.
Former Gov. Jerry Brown signed a similar law in 2018 requiring California-based corporations to appoint women to their boards of directors.
"Women drive consumption, and all corporations would benefit from having women of color in the boardroom. Latinas represent the fastest-growing segment of California and the U.S. population, but hold the least amount of board seats," California Legislative Women's Caucus Chair, Assemblywoman Cristina Garcia, said in a statement.
Last year, the board organization launched an initiative targeting corporations with no Latino representation on their boards of directors, including Pacific Gas and Electric Company, El Pollo Loco Holdings, Inc., Del Taco and Chipotle Mexican Grill.
Last month, Chipotle Mexican Grill announced Mauricio Gutierrez would join its board. Apple Inc. appointed Monica Lozano in January to its board of directors.
Jurado Munoz hopes the numbers and campaign show corporations that "we have lots of talent that can be tapped."
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