September 8, 2016
BE 100s Titan John Rogers: Why Black Board Members Matter to Your Wealth
BLACK ENTERPRISE recently unveiled its latest listing of top black board members among the 300 largest publicly traded corporations—our BE Registry of Corporate Directors—at the Black Corporate Directors Conference. Held annually at the Montage in Laguna Beach, California, this event brings together scores of the most powerful African Americans directing corporate America. As such, they discuss, among other matters, how their board service can increase shareholder value while expanding diversity and inclusion.
One of the founders of this 16-year-old summit is John W. Rogers, Jr., one of the nation’s leading proponents of value investing and CEO of BE 100s firm, Ariel Investments; number one on the BE ASSET MANAGERS list, with $10 billion in assets under management. Rogers, who serves on the boards of McDonald’s and Exelon Corp., can also be found on our BE Registry. Since we created our annual report on black corporate directors in 2013, he has pointed to our data as a measure of inclusive corporate governance.
Over the past few years, we have reported on companies with African American corporate directors and those in which African Americans’ presence in the boardroom is nonexistent. Our 2016 roster features 216 board members from a universe of S&P 300 companies based on market capitalization. This year, we identified a number of milestone appointments—most notably at iconic tech companies. They have included the election of James Bell, former CFO and Corporate President of The Boeing Co., to the board of Apple Inc. and the recent naming of Roger Ferguson, former Vice Chairman of the Federal Reserve and CEO of financial services giant TIAA, to the board of Alphabet, the parent of Google.
So, why does the BE Registry have relevance to your financial well-being? These business leaders are charged with the fiduciary responsibility to increase shareholder value by making decisions—everything from acquisitions and divestitures to executive compensation and corporate layoffs, among others—that will ultimately maximize earnings, dividends, and the stock price. As a group, the BE Registry has made shareholders, pension funds, and prospective retirees—maybe even you—trillions of dollars.
Moreover, it has been demonstrated that the critical factors for twenty-first-century competitiveness, which include continuous innovation, shifting demographics, and gaining a significant share of black consumer and business markets, mean corporations can ill afford to operate without African Americans in this oversight process.
Over the years, I have discusses this issue with Rogers, who carries a copy of Martin Luther King, Jr.’s “Letter From A Birmingham Jail” in his wallet as a compass for guiding his mission: “I’m going to help with the diversity initiatives of corporate boards, because it is not only the moral thing to do, but it is also going to enhance the success of the business.”
Over the years, Rogers has shared with me why African American participation is so vital. The following represents a few:
Diverse boards create stronger companies for shareholders and stakeholders.
Rogers has often said a deeper pool of talent and diverse points of view lead to better decision making. Moreover, a broad talent search for a director will result in greater assets to any board.
“There are a lot of gifted diverse directors who have been shut out over the years.Â If you have better decision making, it will ultimately increase the value of the common stock.Â There’s no doubt about it, when you are on a corporate board, there are so many important decisions that need to be made. Those decisions have a direct impact on the price of the stock.”
Corporate directors can have a direct impact on building the wealth of employees.
One the most powerful examples Rogers has shared with me was how he sparked the enrichment of the lives of thousands of employees with a question. Several years ago, he pressed for greater African American participation in 401(k) plans while discussing benefits as a member of McDonald’s compensation committee.
“As they looked at the data and realized this was an issue, they thought out solutions. The participation of African American managers within the 401(k) plan went from theÂ 15thÂ percentile to 90%.”
Such advocacy served to benefit all employees.
Corporate directors play a role in CEO succession planning of public companies.Â
Corporate directorships serve as a recruiting ground for future CEOs and board chairmen. One of the most recent examples has been the appointment of Arnold Donald to Chief Executive of Carnival Corp. after serving on its board; a position he still continues to hold. And Silicon Valley Power player and Microsoft board member, John Thompson was named chairman of the company’s board two years ago. Â
“Once [African Americans] are there and people see us, alongside white directors, more often than not, I see African American directors move into these leadership roles. People say, ‘Hey, these guys are pretty good here. Actually, they are really the best. We are going to make them chairman of the whole company or CEO.’ It shows how talented our folks are. We just need an opportunity to get in the room.”