Tag: ESG

Scant Diversity Data in Human Capital Disclosures

Mentions of diversity are featuring prominently in companies’ human capital disclosures this proxy season; however, most companies are staying mum on the numbers. An analysis of 10-Ks filed by big companies by mid-April shows that only about a third disclosed any workplace demographic data on race and ethnicity. Fewer still broke the data out into specific demographic groups.

The new human capital management disclosure requirement was introduced by the Securities and Exchange Commission for the 2021 proxy season and requires companies to disclose material factors related to the management of the workforce. However, the SEC provided little guidance on what exactly companies should disclose, leaving it up to them to determine what would be material to investors.

Thus, the type of information disclosed so far varies widely. Some commonly included fields were global head count, regional representation of employees, employment contract type, collective bargaining agreements, staff turnover, components of employee compensation and wellness initiatives, among others.

…But only 35% of the companies disclosed data on racial and ethnic demographics according to an analysis of data from public company intelligence provider MyLogIQ.

Asian-American Professionals Push For Visibility at Work

Kaycee Lai spent years in Silicon Valley trying to avoid calling attention to his ethnic identity.

Early in his career, if he left work to get bubble tea, a Taiwanese drink, he’d tell his white colleagues he was getting coffee. When co-workers made comments about his race—such as suggesting that, as an Asian male, he should be in coding rather than sales—he would laugh them off.

“For the longest time, Asian-Americans have felt like you can achieve the American dream so long as you shut up and aren’t seen,” says Mr. Lai, who worked at Microsoft and software company VMware before founding his own data-analytics firm, Promethium, in 2018.

But amid a wave of outrage and sorrow prompted by a recent surge in verbal and physical attacks against people of Asian descent, that sentiment is changing among many Asian-American professionals. Since the Atlanta shooting last month in which six women of Asian descent were among eight killed, many Asian professionals have talked at company town halls about their experiences of racism and what it means to be Asian in U.S. workplaces and society. Some have pushed for donations from their employers toward issues facing Asian communities, while others have simply called for Asians to be more visible in the workplace.

…Among CEOs of S&P 500 companies, 3% are Indian and 2% are of other Asian descent, according to MyLogIQ, a data tracker.

McDonald’s CEO Made 1,100 Times What His Workers Did

The U.S. Securities and Exchange Commission (SEC) has long required public corporations to disclose the compensation of their top officers. The debate about whether chief executive officers are paid too much has gone on for decades. Many investors object to high CEO pay, which often runs into the tens of millions of dollars. Boards of directors claim that good CEOs are hard to find and that they have responsibilities for tens of thousands or even hundreds of thousands of workers.

Last year, the CEO of McDonald’s, Christopher Kempczinski, made 1,189 times the median compensation of his workers, according to an exclusive analysis of the pay of 294 public company CEOs done by MyLogIQ, which uses artificial intelligence (AI) and machine learning to examine SEC data. His total pay was $10,847,032 in 2020. The company’s proxy stated, “McDonald’s is committed to a strong pay-for-performance culture that closely aligns the interests of executives with those of shareholders.”

This CEO Made 2,900 Times More Than His Employees

The U.S. Securities and Exchange Commission has long required public corporations to disclose the compensation of their top officers. The debate about whether chief executive officers are paid too much has gone on for decades. Many investors object to high CEO pay, which often runs into the tens of millions of dollars. Boards of directors claim that good CEOs are hard to find and that they have responsibilities for tens of thousands or even hundreds of thousands of workers.

Last year, one American CEO made over $200 million, which is 2,963 more than the median compensation of his workers. According to the SEC, “The median employee’s annual total compensation was $71,259 in 2020” at the company he runs. He was also the only CEO to make over $100 million, according to an exclusive analysis of the pay of 294 public company CEOs done by MyLogIQ, which uses artificial intelligence and machine learning to analyze public company data.

This CEO Made 300 Times More Than His Workers

The U.S. Securities and Exchange Commission has long required that public companies post the annual compensation of their top executives in their proxies. In 2015, the SEC ruled that public corporations had to show how much their CEOs made in relationship with the median salary of their firm’s workers. The rule went into effect in 2017. The decision was part of the larger Dodd-Frank Act, which Congress passed as a sweeping reform of the federal’s governments financial regulations.

Using artificial intelligence and machine learning, MyLogIQ provides information about public companies. The firm has provided data exclusively to 24/7 Wall St. that covers CEO pay ratios from 294 public companies that have released their 2020 proxies. CEO compensation included salary, bonuses, stock awards, stock options, long-term incentives, short-term incentives and changes in pension values, all of which are required to be broken out by SEC rules.

The person who had the highest ratio of pay to the median compensation of his company’s employees was Michael F. Roman, the board chair and chief executive officer of 3M. His ratio was an extraordinary 308 to 1. In the 3M proxy, the company reported, “[W]e selected the median employee from among 96,902 full-time, part-time, temporary and seasonal workers who were employed as of December 31, 2020.”

Risk Committees Triple Since 2010

After the financial crisis, regulators put rules in place for large banks and financial institutions to create a board committee dedicated solely to enterprise risk, rather than continuing to fold this function into the audit committee.

Now, in the midst of a new kind of crisis, boards across industries are considering risk oversight duties, and some could be weighing whether a stand-alone committee is the appropriate option.

Many boards, not just in the financial sector, have added stand-alone risk committees over the past decade. This is true within both the S&P 500 and the Russell 3000. According to Spencer Stuart, 13% of S&P 500 boards now have a risk committee, up from 4% in 2010. Of the 62 boards that had a risk committee in 2020, 42 of those were financial services companies. “On many other boards, the audit committee oversees the risk management functions,” the 2020 Spencer Stuart Board Index states.

And in the Russell 3000, 11% had stand-alone risk committees in 2020, up from 6% a decade ago, according to data from MyLogIQ, a provide of public company intelligence.

Why Are There Still So Few Black CEOs?

If corporate life is a pyramid, for Black Americans, it is one with the steepest of peaks.

Out of the chief executives running America’s top 500 companies, just 1%, or four, are Black. The numbers aren’t much better on the rungs of the ladder leading to that role. Among all U.S. companies with 100 or more employees, Black people hold just 3% of executive or senior-level roles, according to Equal Employment Opportunity Commission data.

Decades after the civil-rights movement led to laws banning workplace discrimination, progress for Black executives has hit a ceiling.

“Opportunity is not equally distributed,” says Ron Williams, the Black former CEO of Aetna who has served on 14 boards over his career and currently sits on the boards of Boeing Co. and American Express Co. Too many promotions in companies are informally decided before jobs are ever posted, leaving Black people and more marginalized talent without the chance to compete, he says. “People don’t get the chance to work their way into a position where they are a reasonable candidate for a role,” he says.

…The ranks of Black chief executives have stayed low even as other ethnic minorities have seen greater, albeit still limited, advancement. Among CEOs of S&P 500 companies, 11% are ethnic minorities. Of the total, 3% are Latino, 3% are Indian, 2% are Asian, 1% are Middle Eastern and 1% are multiracial. Just 1% are Black, according to an analysis by MyLogIQ, a data tracker. Black people make up about 13% of the U.S. population.