Today is an important day for diversity on Wall Street. Here’s the reason



Good thing those numbers are finally going up, because today also marks an important deadline for all Nasdaq-listed companies: They must fill out a board diversity matrix that includes the total number of company board members and how those board members self-identify in terms of gender, race, ethnicity and LGBTQ+ status. The results are made public through proxy statements at the annual meeting or through company websites.

From 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.

“Signals that we measure what we value, the stock exchange is sending a big message on its priorities,” wrote S. Mitra Kalita, founder and CEO of URL Media and a former CNN executive. Board diversity.

“Disclosing this information to investors empowers shareholders to support companies that embody their ideals and draw investment from companies that don’t,” said Representative Carolyn Maloney, Democrat of New York, who chairs the House Committee on Oversight and Reform. conduct. “Besides making ethical and common sense, increased diversity makes economic sense. Studies have repeatedly found that companies with more diverse leadership are better positioned to succeed.”

The 2020 killing of George Floyd by Minneapolis police sparked Black Lives Matter protests across the country, increasing demands for corporate action on diversity and inclusion, said Facil Michael, head of thought leadership at ISS Governance Solutions.

Statistics show that those demands are taken seriously. But numbers don’t tell everything.

Although 19% of the total US population identifies as Hispanic or Latino, directors from that group account for only 5% of S&P 500 board seats, for example.

“Many boards still do not reflect the diversity of their customer base or the demographics of the wider society in which they operate,” Michael wrote. “While there is reason to celebrate progress made in recent years, many companies are expected to face board diversity issues for the foreseeable future β€” along with C-suite diversity, employee equity and fair pay. The long-term trajectory of many corporate diversity and inclusion initiatives remains to be seen.”
It’s not just about boards. New research from McKinsey shows that about 75% of all black and Hispanic employees do front-line jobs such as waiting tables, stocking store shelves or folding clothes, compared to 58% of white workers. And while three out of four of those workers want a promotion, only one in four will. Black workers make up 17% of hourly jobs at major companies, but only 9% of jobs in low-level supervisory roles, where one climbs the ladder.

In addition, front-line hourly employees are about 20% less likely than corporate employees to believe that diversity and inclusion policies make a difference, according to McKinsey.

Large corporations have recently enthusiastically embraced ESG incentives, wrote Alison Taylor, a professor at NYU’s Stern School of Business and executive director of its Ethical Systems Program, and Brian Harvard, the program’s principal research scientist.

But much of what they’re doing “seems like a self-serving ploy to generate positive PR,” they wrote in a joint statement. The current state of corporations’ diversity efforts is “disappointing but understandable … investors pressure them about what amounts to a box-ticking, virtue-signaling exercise β€” and it shows.”

take it McDonald’s (MCD), for example. The company announced last year that it would tie 15% of executive compensation to achieving an annual increase in the proportion of women and minorities in senior leadership.
is good But at the same time, McDonald’s was accused of abusing and “redlining” its black franchise owners, relegating them to the least convenient locations that required costly and unrealistic renovations, and instituting strict grading and inspections over their stores.

“What encouraged that behavior?” Just ask Taylor and Harvard. “Is there a connection between the lack of diversity in senior leadership and these lawsuits? More broadly, why should executives be awarded bonuses for meeting internal goals that should be central to any company’s values ​​and mission?”

The company has denied wrongdoing and claims it treated black franchisees less favorably.

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 those wearing black wool who work in midtown Manhattan but call it Wall Street. The streets are glittering in the golden edition of 2021 … mergers, acquisitions and IPOs.

The economy is back, baby. Due to the hard work of Pfizer, Moderna and Johnson & Johnson, Covid finally met its match. Those Wall Street warriors worked hard and their wages reflected that. Average bonuses reached a record high of $257,500, up 20% from the previous year. That’s on top of very generous base salaries.

Then hit 2022.

Covid rates are still at record highs and shutdowns are rolling supply chains. Inflation, interest rates and lack of IPOs have hit the financial world hard. M&A activity has fallen by 25% and IPOs have halved from last year. Investment banking revenue fell 61% at JPMorgan Chase and 55% at Morgan Stanley last quarter.

Now, year-end bonuses are expected to drop significantly. My CNN industry colleague Allison Morrow reports that those working in finance can expect a nearly 50% drop in their compensation. Read more here.

Inflation, the hot new word

We all know that inflation has reached historic highs. This earnings season has shown us that even corporations have noticed.

According to new data from Cision, there has been a 26% increase in mentions of “inflation” from publicly traded companies’ earnings reports so far this quarter.

“Inflation” was mentioned 19,518 times and 827 times during the same period in 2021. Interestingly enough, “corporate greed” was the most used phrase among Twitter users talking about earnings reports, with 9,577 mentions. compared to just 8 in 2021.

Corporations increased references to “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% drop in mentions as a negative factor this quarter while talk of the pandemic fell by 17%.

Next

Tyson Foods and Palantir Technologies will report earnings before US markets open.

Today too: NY Fed 3-year inflation expectations are out.

Coming up tomorrow: Sysco, Coinbase and Hyatt report earnings.



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