Residents wait in line to cast ballots for the Senate runoff elections in Atlanta, Georgia, U.S., on Jan. 5, 2021.
Aboubacar Kante/BloombergChief executive officers should get board approval before taking a stance on social justice issues, according to a survey that BoardProspects, a digital platform for companies to find board talent and C-suite executives, shared with Barron’s.
BoardProspects surveyed its more than 4,000 members, who are corporate executives, and current and prospective board members, after Georgia passed a controversial law to restrict voting access in the state. Republicans are pushing to restrict voting in Arizona, Florida and Texas. Democrats and others have condemned the voting bills as targeting voters of color.
The planned voting restrictions have been opposed by more than 300 companies, CEOs, and other executives in a letter organized by Kenneth Chenault, the former chief executive of American Express, and Kenneth Frazier, CEO of Merck. “There is overwhelming support in corporate America for this principle of voting rights,” Chenault said. The Chenault letter didn’t directly address specific voting legislation, nor does it call on companies to take business action or halt political donations to lawmakers supporting such bills.
In the BoardProspects survey, slightly more than half, or 54%, of respondents said companies doing business in Georgia should take a position on the new voting law. A greater proportion, or 73%, of the membership that are racial and ethnic minorities, said the same. Of BoardProspects’ membership, 24% are racial and ethnic minorities, said Mark Rogers, BoardProspects’ CEO, in an interview with Barron’s.
Of the respondents that said companies should take a position, 72% said companies should oppose the law, and 23% said they should issue a general statement in support of the need to protect voting rights.
There isn’t a definitive count of how many CEOs sought approval from boards before wading into the fray, but some haven’t, Rogers said. A majority of BoardProspects’ membership, or 62%, said CEOs should absolutely seek board approval first before taking a public position on a social justice issue. Of the respondents who are racial or ethnic minorities, 52% said the same.
“We asked this question of the membership because people are surprised that some of these CEOs haven’t alerted their boards,” Rogers says.
Many investors have applauded such initiatives from CEOs because they fit in with the widening trend to stakeholder capitalism, or broad duties to the community. But some critics have called it a dangerous trend, because corporations can’t be voted in and out like elected representatives.
“It’s a slippery slope,” says Rogers. “If you make a statement on one social justice issue, do you make it on every issue? Then you’re picking and choosing which issue to get involved in.”
Ultimately, “it’s the board’s responsibility to protect shareholder value,” he continued. A CEO “should really run this by the board and make sure they’re aware of it.”
Write to Leslie P. Norton at leslie.norton@barrons.com
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April 17, 2021 at 10:00PM
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CEOs Should Seek Board Approval on Social Justice Stances, Survey Says - Barron's
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