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My experience is that this is a good thing for shareholders. The current qualifications -- part of a network -- aren't actually very merit-based or constructive

My experience is that this is a good thing for shareholders. The current qualifications -- part of a network -- aren't actually very merit-based or constructive. Boards composed of rich, white, Anglo-Saxon males tend to not understand customers or employees very well. A bigger step forward would be international representation. Companies mess up or completely miss markets like the billion plus people in Africa, the billion plus people in India, or the billion plus people in Muslim-majority countries. Even nominal international representation would be huge. People tend to fetishize the types of people on boards, but I've worked with a fair number, and the skills which they have -- being able to become a board member through complex political and networking games -- aren't actually very well-aligned with maximizing shareholder value.

jl2718 5y ago
If it’s better for shareholders, then why didn’t they vote for it already? Your post implies that you believe that the white male board members are inept, there only for their network, and the new diverse members will be more competent in the specific business, better with customers and employees. Please enlighten us with the evidence that supports this assertion.
- gibba999 5y ago
  My evidence is having seen boards operate. I wouldn't quite use the word "inept," but I would say the in most companies, at least 10% of the workforce would do a better job than the board members. You live in a democracy. If your municipal politicians were corrupt, why didn't you vote them out? The answer is that information is that the efficient market hypothesis isn't correct. Every so often, I receive a list of board members to vote for on the few stocks I hold. The list is as long as the number of seats. I know nothing about them except for at best a 1-paragraph description. If there were more, it would not worth my time as an individual shareholder to do more research. That's a minority of my investments. Most are in index funds and mutual funds. There, someone votes on my behalf. I'm not sure who -- I know which company, but absolutely nothing about the person or process. And yes, I've seen companies I've worked at or followed closely target 300 million person markets instead of 7 billion person markets.
  - jl2718 5y ago
    That has zero relevance to your basis for the assertion that the new diverse members will be different. My observation is that diversity seats are given to an even smaller number of people that have even less involvement with the many businesses they sit on.
    - gibba999 5y ago
      America is 30% African American or Hispanic. Most boards have no idea about how to target products to those cultures. Those are blind spots and missed opportunities. If I had my druthers, a corporate board would include: * An employee * A customer * 2-3 people from non-US countries * A person from a minority American community (e.g. AA or Hispanic) * .. and so on. As is, boards include rich white CEOs, or sometimes professors, or similar, who have absolutely no first-hand experience with a lot of what's needed in the boardroom.
      - jl2718 5y ago
        That’s a reasonable value proposition for the type of company that would be relevant for. I think a more relevant role for a minority board member in the way you describe would be marketing partnerships with other firms that would help reach that demographic. However, this would still be, as all board members are, chosen for their connections, probably even more so than the old fogeys that grew up with the business. But fundamentally I see your point, and my guess is that the firms that this is relevant to know their business better than anybody else, and have been trying their best to find someone that will be good for the business. If I had to guess at the difficulty, it’s that well-connected women and minority business leaders face so much pressure to deliver social justice rather than profits, and these businesses might not be interested in sponsoring that. Your board makeup is very idealistic, as in, assuming that boards are active participants in the business. Think investor relations and partnerships. Expect the female and minority multiple representation trend[1] to accelerate with this mandate. [1] https://corpgov.law.harvard.edu/2021/06/25/the-board-diversity-census-of-women-and-minorities-on-fortune-500-boards/ https://corpgov.law.harvard.edu/2021/06/25/the-board-diversi...

jl2718 5y ago

If it’s better for shareholders, then why didn’t they vote for it already? Your post implies that you believe that the white male board members are inept, there only for their network, and the new diverse members will be more competent in the specific business, better with customers and employees. Please enlighten us with the evidence that supports this assertion.

gibba999 5y ago
My evidence is having seen boards operate. I wouldn't quite use the word "inept," but I would say the in most companies, at least 10% of the workforce would do a better job than the board members. You live in a democracy. If your municipal politicians were corrupt, why didn't you vote them out? The answer is that information is that the efficient market hypothesis isn't correct. Every so often, I receive a list of board members to vote for on the few stocks I hold. The list is as long as the number of seats. I know nothing about them except for at best a 1-paragraph description. If there were more, it would not worth my time as an individual shareholder to do more research. That's a minority of my investments. Most are in index funds and mutual funds. There, someone votes on my behalf. I'm not sure who -- I know which company, but absolutely nothing about the person or process. And yes, I've seen companies I've worked at or followed closely target 300 million person markets instead of 7 billion person markets.
- jl2718 5y ago
  That has zero relevance to your basis for the assertion that the new diverse members will be different. My observation is that diversity seats are given to an even smaller number of people that have even less involvement with the many businesses they sit on.
  - gibba999 5y ago
    America is 30% African American or Hispanic. Most boards have no idea about how to target products to those cultures. Those are blind spots and missed opportunities. If I had my druthers, a corporate board would include: * An employee * A customer * 2-3 people from non-US countries * A person from a minority American community (e.g. AA or Hispanic) * .. and so on. As is, boards include rich white CEOs, or sometimes professors, or similar, who have absolutely no first-hand experience with a lot of what's needed in the boardroom.
    - jl2718 5y ago
      That’s a reasonable value proposition for the type of company that would be relevant for. I think a more relevant role for a minority board member in the way you describe would be marketing partnerships with other firms that would help reach that demographic. However, this would still be, as all board members are, chosen for their connections, probably even more so than the old fogeys that grew up with the business. But fundamentally I see your point, and my guess is that the firms that this is relevant to know their business better than anybody else, and have been trying their best to find someone that will be good for the business. If I had to guess at the difficulty, it’s that well-connected women and minority business leaders face so much pressure to deliver social justice rather than profits, and these businesses might not be interested in sponsoring that. Your board makeup is very idealistic, as in, assuming that boards are active participants in the business. Think investor relations and partnerships. Expect the female and minority multiple representation trend[1] to accelerate with this mandate. [1] https://corpgov.law.harvard.edu/2021/06/25/the-board-diversity-census-of-women-and-minorities-on-fortune-500-boards/ https://corpgov.law.harvard.edu/2021/06/25/the-board-diversi...