Goldman Sachs CEO David Solomon on Thursday threw down the gauntlet to milquetoast corporate boards everywhere when he told CNBC's "Squawk Box" that the bank would no longer help companies go public that did not have at least one "diverse" board member.
"Starting on July 1st in the U.S. and Europe, we're not going to take a company public unless there's at least one diverse board candidate, with a focus on women," said Solomon from the World Economic Forum in Davos, Switzerland.
The policy will go into effect on June 30, with plans to double the requirement in 2021. While Solomon admitted that the policy might lose the investment bank business in the short-term, the executive made the case that more diverse boards are ultimately good for business.
A Goldman Sachs study found that companies with two or more female board representatives saw their average price performance improve 44 percent within one year, compared to 13 percent for companies with no female board representation. It also found that more than 60 U.S. and European companies went public in the last two years without any female board members, and 100 went public with just one female board member.
"We believe strongly in the business case for diversity, and that having diverse perspectives on the Board leads to better governance and better company performance," a company spokesperson told Cheddar.
Over the next six months, Goldman said it will work with existing clients to improve board diversity in the lead-up to their IPOs. For those daunted by the task, the bank said it would leverage its network of partnerships and potential candidates to help them out.
While Goldman's commitment signals top-level support for corporate diversity, progress toward less homogenous board rooms has been ongoing for over a decade.
The overall percentage of female board members in Fortune 500 companies jumped from 16 percent in 2008 to 27 percent in May of 2019, according to the most recently available data from ISS Analytics.
Ethnic and racial minorities made slower progress, increasing from 8 percent to 10 percent of total board representation over the same span.
Each year brings fresh blood, however, and the latest batch of appointees shows greater progress toward gender and racial parity. Among the new board members appointed in 2019, 46 percent were women, which is up six percent from the year prior. The number of racial and ethnic minorities among rookie board members was 21 percent, up from 18 percent the year prior.
But companies haven't made the shift entirely on their own. There has been increased pressure from legislators to speed up the process.
In spring 2019, Maryland passed legislation urging public companies to have a minimum of 30 percent of female directors on their boards by Dec. 31, 2022. Illinois passed a law over the summer that requires publicly-traded companies to have a woman, a Latino person, and a black person on their boards by the end of 2020. California passed a similar bill in 2018.
Goldman Sachs' support puts weight behind the movement, Crunchbase research lead Gené Teare told Cheddar.
"They are the most storied firm taking companies public, and I think everyone will take note," Teare said. "It's high time to have these very big and powerful voices weigh in. I think it just adds to the pressure on companies to make those numbers shift."
The New York Times and President Donald Trump are fighting again. The news outlet said Wednesday it won't be deterred by Trump's “false and inflammatory language” from writing about the 79-year-old president's health. The Times has done a handful of stories on that topic recently, including an opinion column that said Trump is “starting to give President Joe Biden vibes.” In a Truth Social post, Trump said it might be treasonous for outlets like the Times to do “FAKE” reports about his health and "we should do something about it.” The Republican president already has a pending lawsuit against the newspaper for its past reports on his finances.
OpenAI has appointed Slack CEO Denise Dresser as its first chief of revenue. Dresser will oversee global revenue strategy and help businesses integrate AI into daily operations. OpenAI CEO Sam Altman recently emphasized improving ChatGPT, which now has over 800 million weekly users. Despite its success, OpenAI faces competition from companies like Google and concerns about profitability. The company earns money from premium ChatGPT subscriptions but hasn't ventured into advertising. Altman had recently announced delays in developing new products like AI agents and a personal assistant.
President Donald Trump says he will allow Nvidia to sell its H200 computer chip used in the development of artificial intelligence to “approved customers” in China. Trump said Monday on his social media site that he had informed China’s leader Xi Jinping and “President Xi responded positively!” There had been concerns about allowing advanced computer chips into China as it could help them to compete against the U.S. in building out AI capabilities. But there has also been a desire to develop the AI ecosystem with American companies such as chipmaker Nvidia.
U.S. sports betting is booming as NFL and college football fuel massive activity. BetMGM CEO Adam Greenblatt breaks down trends, growth, and what’s next.
President Donald Trump says a deal struck by Netflix last week to buy Warner Bros. Discovery “could be a problem” because of the size of the combined market share. The Republican president says he will be involved in the decision about whether federal regulators should approve the deal. Trump commented Sunday when he was asked about the deal as he walked the red carpet at the Kennedy Center Honors. The $72 billion deal would bring together two of the biggest players in television and film and potentially reshape the entertainment industry.
Disney's changes to a program for disabled visitors are facing challenges in federal court and through a shareholder proposal. The Disability Access Service program, which allows disabled visitors to skip long lines, was overhauled last year. Disney now mostly limits the program to those with developmental disabilities like autism who have difficulty waiting in lines. The changes have sparked criticism from some disability advocates. A shareholder proposal submitted by disability advocates calls for an independent review of Disney's disability policies. Disney plans to block this proposal, claiming it's misleading. It's the latest struggle by Disney to accommodate disabled visitors while stopping past abuses by some theme park guests.
With a merger this big, creators, studios, and theaters all face uncertain futures. Here’s what experts are worried about and what good could come from it.
With disengagement rising and hybrid work shifting, 'Everybody Matters' author Bob Chapman explains why treating people well could define the future of work.
We sat down with Ali Furman, U.S. Consumer Markets Industry Leader at consulting firm PwC to ask what trends she garnered from the initial data this year.
