While state laws requiring public corporations to add underrepresented people to their boards continue to be challenged in courts, many local firms have already adopted the bills’ provisions ahead of the Dec. 31 deadline. Others, such as Hawthorne-based OSI Systems Inc., are finalizing choices now.

“Since I’ve been on the board, we have been in the process of identifying other candidates,” said Kelli Bernard, an AECOM executive who joined OSI Systems’ seven-member board in December 2019. “We’re hoping in the first part of next year that we will have another female candidate on the board.”

SB 826, which was signed into law in 2018, stipulates that five-member boards must include at least two women directors, or three women if the corporation has six or more directors. AB 979, passed last year, calls on corporations to add at least one person of color or a member of the LGBTQ community to their boards by the end of this month, and two by the end of next year. The quota goes up to three for boards with at least nine people.

Recent additions

Local companies that have added to their boards this year to comply with the new regulations include Hope Bancorp Inc., a Koreatown-based bank with $17.8 billion in assets that appointed Mary Thigpen Aug. 1 and Lisa Pai Dec. 8. The bank also increased the number of its directors from 11 to 12.

Downtown-based water infrastructure developer Cadiz Inc.’s eight-member board includes three women — Carolyn Webb de Macías and Maria Echaveste who joined in 2019, and Susan Kennedy, who was appointed March 24.
 
“Susan is an accomplished and well-respected leader with a diverse background as a CEO, government regulator and consensus builder,” the company’s chief executive, Scott Slater, said at the time of Kennedy’s appointment.
 
City of Industry-based Torrid Holdings Inc., a newcomer to public markets, added Valeria Rico Nikolov to its five-member board in September. Rico Nikolov, who serves as chief executive of GGA Solutions in Beverly Hills, “brings knowledge and expertise in marketing and strategic planning as well as people management in consumer-facing businesses,” the apparel company’s chairman, Stefan Kaluzny, said in a statement.

New points of view

OSI Systems, which has a market value of $1.6 billion, makes security scanning equipment, medical monitoring devices and optoelectronic components.
Bernard serves on the risk management committee, helping OSI Systems’ management navigate insurance- and human resources-related risks. Although this is her first seat on a corporate board, Bernard served as deputy mayor for economic development for the city of Los Angeles from 2013 to 2016, overseeing eight departments, including Los Angeles World Airports and the Port of Los Angeles.

She said that her current role at Dallas-based infrastructure giant AECOM, as well as serving on the board of the Los Angeles Area Chamber of Commerce, gave her “a lens into what other companies were doing and how they were responding” to Covid-related and other challenges, and she was “able to bring that expertise back to OSI.”
Bernard’s fellow board members and Chief Executive Deepak Chopra have been helpful in bringing her up to speed on OSI’s capabilities and are also open to her ideas and suggestions.

“The guys on this board have years of experience and expertise, but they have very different lived experiences than I do,” she said. “One is an accountant, and one is a lawyer, one is a serial entrepreneur … but I came from the public sector, so I have this very different experience being on the regulatory side about how we interact on the customer side.”

She added that she was “passionate about increasing diversity before it was part of the national discussion.”
 
“When you have a more diverse constituency or, in this instance board of directors, you just get more ideas and more diverse people bring their own experiences to that,” she said.

 
Enforcement and challenges

SB 826 and AB 979 do not apply to privately held companies, but public companies headquartered in California must file an annual statement with Secretary of State Shirley Weber to disclose whether the company complies with the laws.
 
The secretary of state is authorized to levy a $100,000 fine to public companies found to be not in compliance and $300,000 fine for each subsequent violation.

Opponents of the laws, including the National Center for Public Policy Research and Judicial Watch — both based in Washington, D.C. — have filed lawsuits that are underway at the Los Angeles County Superior Court.
 
Judicial Watch claims SB 826 is unconstitutional because it violates the equal protection clause in the state constitution, according to court documents filed Dec. 1. Article I in Section 31 in the California Constitution specifies that “the state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.”

Meanwhile, the NCPPR claims, “California’s diversity quotas discriminate on the basis of race, sex, and sexual orientation and deny individuals equal protection of the laws” in violation the 14th Amendment to the U.S. Constitution, according to court documents filed Nov. 22.

Bernard’s message to skeptics was simple.
“I would just suggest that having diverse voices — be it women, diversity of age, diversity of experience — it provides better solutions,” she said.