The #MeToo and #TimesUp movements were supposed to be a wake-up call to shake out all that’s wrong in many a workplace. One could argue that the discussion about the scourge of sexual harassment that has long festered in many an office or shop floor is at least being discussed and addressed. But when moving up the corporate ladder, as TriplePundit’s Mary Mazzoni and other writers have pointed out, the glass ceiling in many C-suites and within corporate boards of directors is still proving to be a tough one to crack.
This inclusion problem, or at a minimum a lack of awareness, is still apparent within activist hedge funds as well. According a recent report published by the shareholder activism research firm and publication Activist Insight, activist hedge funds overall have been slow to move the gender equality needle. Activist Insight’s researchers say that of the 143 board members that activist hedge funds nominated during 2018, only 19, a meager 13 percent, were women.
In total, Activist Insight tracked 60 investments funds – and found that only 16 of them nominated women to be on boards of directors.
“In a year when there was a heightened awareness about the long-standing inequality of women in the workplace, activist investors could have been expected to make a bigger push for board equality,” wrote Stephen Gandel for Bloomberg News earlier this week.
Fundamentally, the reason is simple – a diverse set of people sitting at a board meeting, more often than not, will offer various opinions and suggestions for how to move an organization forward – in contrast to a board, which, pardon the pun, is full of “yes men.” As Aflac’s CEO, Don Amos, has been quoted as saying time and again, he is already aware of what a 60-something white man thinks, so there is no reason to surround himself with other 60-something white males.
But companies that have found themselves mired in public relations challenges over the past year are apparently not getting the message. For example, Papa John’s, which had to deal with the racially-tinged shenanigans of its founder and former CEO, John Schnatter, diluted his power by adding three new members to its board. But the three new directors, added as part of the hedge fund Starboard Value’s investment of $200 million in Papa John’s, are all male.
Another example is when athenahealth found itself in the middle of controversy due to allegations of sexual misconduct made against its former CEO. However, after Elliott Management bought out the healthcare technology company, yet another man was appointed as the company's CEO. A similar story can be told by SRS Investment Management, which was in the position to add two new directors to Avis Budget Group’s board – and did so, with both new appointments male.
We’ll certainly see more activist investors wield their power over the companies which they have included within their portfolios. “One certainty is that public companies have accepted activist investors as important shareholders, and have taken increasing efforts to seriously consider, and often accommodate, their suggestions,” concluded Activist Insight’s researchers.
Now, if only these same investors start taking diversity and inclusion seriously by considering such “suggestions" - at the very least because the evidence suggests that taking such steps is better for these companies’ performance - we may just start seeing more boards that look more like America. These changes, in the end, will help bolster these companies’ brand reputation, recruitment efforts and yes, could even lead to an improvement in their financials.
Image credit: WOCinTech Chat/Flickr
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.