Starting in August 2023, companies trading on the exchange must have at least two diverse board members or explain why they are not meeting this diversity objective.
“Disclosing this information to investors empowers shareholders to support companies that embody their ideals and pull investments from those that don’t,” said Representative Carolyn Maloney, a Democrat from New York who chairs the House Committee on Oversight and Reform, in a statement praising the move. “Beyond making moral and common sense, increased diversity also makes financial sense. Studies have repeatedly found that companies with more diverse leadership are better positioned to succeed.”
The 2020 murder of George Floyd by Minneapolis police that ignited Black Lives Matter protests around the country also increased demands for corporate action around diversity and inclusion, said Fassil Michael, head of thought leadership at ISS Governance Solutions.
Those demands are being taken seriously, the numbers show. But the numbers don’t show everything.
Although 19% of the total US population identifies as Hispanic or Latino, directors in that group make up just 5% of S&P 500 board seats, for instance.
In addition, frontline hourly employees are nearly 20% less likely than corporate employees to believe that diversity and inclusivity policies make a difference, according to McKinsey.
But a lot of what they’re doing “appears to be a self-serving strategy to generate positive PR,” they wrote in a joint statement. The current state of diversity efforts by corporations is “disappointing but understandable … Investors pressurize them into what amounts to a box-ticking, virtue-signaling exercise — and it shows.”
“What encouraged that behavior?” ask Taylor and Harward. “Was there any relationship between the lack of diversity in senior leadership and this litigation? More broadly, why should executives be given bonuses for meeting intrinsic goals that ought to be central to any company’s values and mission?”
Bad news on Wall Street
Enjoy the good times while you can because they don’t last forever.
Last year was a lucrative one for the black fleece vest wearers who work in Midtown Manhattan but call it Wall Street. The streets were glistening in the 2021 version of gold … mergers, acquisitions and IPOs.
The economy was back, baby. Covid finally met its match thanks to the hard work of Pfizer, Moderna and Johnson & Johnson. Those Wall Street warriors were working hard, and their pay reflected it. Average bonuses hit a record high of $257,500, up 20% from the year before. That’s on top of very generous base salaries.
Then 2022 hit.
Covid rates are still at record highs, and shutdowns are roiling supply chains. Inflation, interest rates and a lack of IPOs have hit the finance world hard. M&A activity has fallen by 25% and IPOs have dropped by half since last year. Investment banking revenue at JPMorgan Chase fell by 61% and by 55% at Morgan Stanley last quarter.
Inflation, the hot new word
We all know that inflation, at historic highs, has hit our wallets. This earnings season has shown us that corporations have also noticed.
There’s been a 26% increase in mentions of “inflation” so far this quarter from the earnings reports of publicly traded companies, according to new data from Cision.
That has carried over to Twitter, where “inflation” was mentioned 19,518 times versus 827 times in the same period of 2021. Interestingly enough, “corporate greed” was also a much-used phrase among Twitter users talking about earnings reports, with 9,577 mentions compared to only 8 in 2021.
Corporations increased their mentions of “interest rates” and “recession” in this quarter’s earnings reports by 9% and 4%, respectively.
But Russia’s invasion of Ukraine, seen as a major headwind last quarter, saw a 77% decrease in mentions as a negative factor this quarter while talk of the pandemic decreased by 17%.
Up next
Tyson Foods and Palantir Technologies report earnings before US markets open.
Also today: NY Fed 3-year inflation expectations are out.
Coming tomorrow: Sysco, Coinbase and Hyatt report earnings.
