First Proxy Statements Addressing California's Female Director Quota Law …

California's female director quota law has received a great deal of attention in this blog and elsewhere. Beginning this year, the law requires certain publicly traded companies with their principal executive offices in California to have at least one female director. Cal. Corp. Code § 301.3. Thereafter, the mandated minimum number of female directors will depend upon the number of directors.

To date, I have come across two proxy statements discussing California' new law. One simply states:

"30% (3) of our current directors are female. We are currently in compliance with CaliforniaSenate Bill 826 requiring at least 1 female director on the Board by December 31, 2019, and, ultimately, 3female directorsby December 31, 2021."

The other filer, Simulations Plus, Inc., currently has no female directors and a five member board. As a result, the company is asking its shareholders to approve changing the range of authorized directors from 3 to 5 to 5 to 9. The company indicates that if this bylaw amendment is approved that its "likely course of action will be to expand the Board size to 6 members in 2019". Filling that space in 2019 with a female director will not end the matter. By the close of 2021, it will need to have at least three female directors (assuming that the number of directors remains at six). Thus, the company will ultimately need to replace 2 of its incumbent male directors or expand its board to 9 members. The shareholders, of course, will bear the costs of recruiting and compensating the additional directors.