– Reuters reported that, according to the study by the Conference Board and data firm Esguage, the number of new black directors at Russell 3000 companies fell to 12 percent in 2024 from 26 percent two years ago. At the same time, the number of new white directors bounced back to 69 percent, up from historic lows of 52 percent in 2022. Directors and board advisers said conservative backlash through litigation and other means had pushed diversity, equity & inclusion (DE&I) policies down the priority list for companies, often in subtle ways.
‘A couple of years ago more searches had diversity as number one or two criterion than have it there now,’ said Richard Fields, head of the board effectiveness practice at search firm Russell Reynolds.
– The Wall Street Journal reported that US Steel and Nippon Steel filed a pair of lawsuits accusing President Biden, the president of the steelworkers union and the CEO of a rival company of conspiring to scuttle their $14.1 bn tie-up. Biden has rejected Nippon Steel’s purchase of US Steel, citing national-security concerns.
In one lawsuit, the companies asked the DC Circuit Court of Appeals to set aside the decision, claiming that election-year politics subverted a national-security review process. The companies want the appeals court to order a new national-security review of the deal. Also named in the suit was the Committee on Foreign Investment in the US (Cfius).
In a separate suit filed in Pittsburgh federal court, the companies accused Cleveland-Cliffs, its CEO Lourenco Goncalves and United Steelworkers president Dave McCall of racketeering and anti-competitive activities to keep Nippon Steel from completing the deal.
A White House spokesperson said Biden’s decision was based on national security and trade experts’ determination that the deal would create risks to the US. ‘President Biden will never hesitate to protect the security of this nation, its infrastructure and the resilience of its supply chains,’ she said. The US Department of the Treasury, lead agency for Cfius, declined to comment.
McCall said the United Steelworkers union is reviewing the complaint and will ‘vigorously defend against these baseless allegations.’
Cleveland-Cliffs said it is prepared to fight the lawsuit. ‘US Steel made their bed when they rejected an all-American solution and insisted on pursuing a doomed-to-fail sale to Nippon Steel,’ said Goncalves.
– According to CNBC, the Federal Reserve’s top banking regulator will be stepping down next month, opening the door for President-elect Donald Trump to name a replacement and avoiding a potential confrontation between the two. Michael Barr’s resignation from the post of vice chair for supervision takes effect as of February 28, though he will stay on as a governor on the Fed board. His term as Fed governor lasts until 2026.
Although he did not specifically mention the rumors that Trump would attempt to remove him, Barr said in a statement that ‘the risk of a dispute over the position could be a distraction from our mission. In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.’
– The FASB will evaluate two important issues in 2025 around how companies report their performance metrics and research and development spending, the WSJ reported. The board will determine whether to add the issues raised to its standard-setting or research agendas over the next year and beyond, chair Rich Jones said in an interview.
The FASB could dive into two hot-button accounting topics: companies’ use of financial KPIs and their accounting for intangible assets such as drug development, cryptocurrency or brands. ‘You’re seeing us really explore what, depending on the direction those projects take, could be a very significant shift in financial reporting,’ Jones said.
– The Guardian reported that McDonald’s Corporation is ending some of its diversity practices, citing a US Supreme Court decision that outlawed affirmative action in college admissions. It is the latest big company to change tactics in the wake of the 2023 ruling and a conservative backlash against DE&I programs.
McDonald’s said it will drop specific goals for achieving diversity at senior leadership levels. It also plans to end a program that encourages its suppliers to develop diversity training and to increase the number of minority group members represented within their own leadership ranks. The company said the ‘shifting legal landscape’ after the Supreme Court decision and the actions of other companies caused it to examine it own policies.
– According to the AP, Meta has appointed three new members to its board, including Dana White, the president and CEO of Ultimate Fighting Championship (UFC) and a familiar figure in the orbit of incoming President Donald Trump. Trump is a longtime UFC fan and frequent attendee of major fights. His ties with White date back to 2001, when White hosted a UFC at the Republican’s former casino-hotel in Atlantic City, New Jersey.
Meta is also adding auto tycoon John Elkann and tech investor Charlie Songhurst to its board.
– Berkshire Hathaway shareholder Tulipshare, an activist investor group, wants a committee of independent directors to oversee risks associated with AI at the dozens of companies in the conglomerate, Reuters reported.
Tulipshare said it has submitted a shareholder resolution for Berkshire’s AGM on May 3 to create the committee. It said improper use of AI could result in data leaks, privacy intrusions, business disruptions and human-rights abuses and that Berkshire’s influence in many industries gives it a unique opportunity to be a leader in AI governance.
Warren Buffett's assistant Debbie Bosanek said Berkshire will include Tulipshare's proposal in its proxy statement.
– According to Reuters, Tesla directors got court approval for a settlement worth up to $919 mn that requires them to return compensation to the company to resolve allegations they overpaid themselves. The settlement requires Tesla board members to collectively return roughly $277 mn in cash, $459 mn in stock options and to forgo stock options for 2021-23 worth $184 mn. The settlement also included governance changes such as requiring shareholder approval for director compensation. The directors did not admit wrongdoing.
The settlement resolves a 2020 lawsuit by the Police and Fire Retirement System of the City of Detroit, which challenged director compensation from 2017 to 2020 as excessive. ‘We’re very pleased with the chancellor’s ruling,’ said Andrew Dupre, an attorney for the shareholders.
The company and its attorney did not immediately respond to a Reuters request for comment. Elon Musk did not receive compensation for his role as a Tesla board member.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
