Gender Diversity on Corporate Boards: How Racial Politics Impedes Progress in the United States

The excellent conference organized by Darren Rosenblum comparing global approaches to board diversity inspired me to think about how progress in this context has unfolded in the United States. Even though the issue of diversity on corporate boards has become a global issue, few U.S. boards have moved beyond mere tokenism when it comes to female directors. One reason for the lack of diversity among corporate directors is that board selection has been based on membership in a particular network. This essay, however, focuses on the persisting problem of discrimination—a more invidious explanation for the fact that very few corporate boards reflect the gender and racial diversity of their workers, consumers, and the communities in which they do business

AFRICAN-AMERICAN ENTREPRENEURS: INTEGRATION, EDUCATION, AND EXCLUSION

(Excerpt) In this Article, I describe some of the subtle, obscure, and hidden challenges that African-American entrepreneurs face by providing the narratives of three African-American businesspeople. Two of the narratives are about African Americans who started businesses in the first half of the twentieth century. Theirs is a success story. Their businesses thrived. Yet, for a variety of reasons, the success these two entrepreneurs enjoyed would be unlikely today, even with the legislation and policy initiatives enacted in the latter half of the twentieth century and aimed at providing access to opportunities for people of color. The third narrative is about a twenty-first-century businesswoman, Ernesta Procope, an African-American woman who has headed Wall Street’s largest minority-owned firm for decades. Her story is also a success story, but it is a story about success achieved in spite of subtle and perhaps unconscious decision making that impedes the entrepreneurial achievement of twenty-first-century African Americans. This twenty-first-century narrative reveals the intractability of the problem of lack of access to opportunity for black entrepreneurs

Teaching Gender as a Core Value in Business Organizations Class

(Excerpt) I teach a business organizations course that is typically a large class with up to ninety students. At some point in the first week of each semester, I talk about public companies and the men who lead them. I point out to my students that while it is appropriate in most contexts to use gender-neutral language, it would be inaccurate to do so when talking about big business. Only fifteen percent of the board seats at Fortune 500 companies are held by women, and only sixteen percent of Fortune 500 corporate officers are women. I let my students know that when we talk about business organizations, particularly big business, we are talking about class, race, and gender-we are talking about affluent white men. Most years, we also talked about people of color and women in my business organizations course. This was easy to do after two large class actions were filed in the 1990s against Texaco and Coca-Cola alleging race discrimination and as the huge sex-discrimination class action against Wal-Mart unfolded. We talked about the power of shareholders to communicate with each other about discriminatory corporate cultures through the shareholder-proposal process. We also discussed communication between shareholder activists and corporate management through the process of demand in the derivative-litigation context. And, as the subprime debacle unfolded, we talked about fiduciary duty and the mortgage companies that targeted communities of color for subprime loans even when borrowers had good credit records. But, when there is no big news story involving women or people of color, it is difficult to bring the discussion into a survey course taken by students who want to learn the basics of business for the bar examination or for a career in the corporate world

How Predatory Mortgage Lending Changed African American Communities and Families

(Excerpt) This symposium focuses on efforts to reform the secondary mortgage market in the aftermath of the most potent economic downturn in U.S. history since The Great Depression. One question posed at the symposium in several forms was whether low-income Americans should be encouraged to own a home. Implicit in this question is the idea that low­-income homebuyers were responsible for the losses that investors in mortgage-backed securities incurred. This question is part of a familiar narrative: investors in mortgage-backed securities suffered, and the economy suffered, because low-income homebuyers defaulted. My essay, however, looks beyond the alleged irresponsibility of homebuyers and considers the role that lenders played in precipitating the economic downturn. I explore how predatory mortgage lending changed African American communities and families

We Are An Equal Opportunity Employer : Diversity Doublespeak

There are too few discussions about race and race relations among corporate managers and directors. The rhetoric used in these infrequent discussions revolves around the idea of diversity in the workplace. In recent years, when speaking about employees and race issues, corporate actors have become curiously silent about discrimination and racism. This Article provides several examples of the rhetorical devices used by corporate spokespersons that ignore persisting problems with discrimination and racism by focusing solely on diversity efforts. Diversity rhetoric allows corporate managers to avoid responsibility for enduring discrimination in the workplace. Diversity efforts, without antidiscrimination efforts, increase the likelihood that the company will be engaged in litigating and mediating disputes about discrimination. This Article explores the potential for improving the discourse about race and racism in the corporate setting in a way that has the potential to transform racially-toxic corporate cultures

Organizational Responsibility for Workplace Racial and Sexual Harassment: The Stories of One Company\u27s Workers

(Excerpt) I begin this Article with the testimony of an African-American man who, along with hundreds of African-American coworkers, brought a race discrimination suit against an industrial construction and fabrication limited liability company ( LLC ) doing business in Texas and Louisiana. The company, Turner Industries ( Turner ), rigorously defended itself against the allegations, and rather than settle the case, Turner and ten of the plaintiffs went to trial in October 2012. A jury awarded two of the ten plaintiffs in the 2012 Bellwether trial $2 million each in damages, but the plaintiff whose testimony I include above lost at trial and was awarded nothing. It seems, however, that even though eight of the Bellwether trial plaintiffs walked away with nothing, the biggest loser was Turner. Turner spent thousands of dollars to defend itself against the case, and in some circles, its reputation has been profoundly harmed

Effective Compliance with Antidiscrimination Law: Corporate Personhood, Purpose and Social Responsibility

I begin the essay with an examination of the overlap between corporate governance and corporate social responsibility. After doing so, I explore the notions of corporate personhood and purpose in order to suggest ways to make compliance programs less cosmetic and defensive and more meaningful and effective. I conclude that the decision making that is inherent in corporate governance is an important factor in the corporate social responsibility equation. There is a gap that separates the fulfillment of fiduciary duties (including the installation and upkeep of a compliance program) and best practices. Companies and their managers can win litigation, or perhaps even avoid litigation that alleges fiduciary duty breach by doing the bare minimum. But what can inspire them to adhere to best practices, particularly when it comes to installing and maintaining an effective compliance program? My answer to this question in this essay requires an exploration of how corporate governance and corporate social responsibility are not clearly separate, and an examination of corporate personhood and purpose that may inspire businesses to adhere to best practices

Fiduciary Duty and the Public Interest

(Excerpt) Professor Tamar Frankel’s excellent book, Fiduciary Law, is a thorough and comprehensive look at the fiduciary-law forest. My contribution to the Symposium on The Role of Fiduciary Law and Trust in the Twenty-First Century is one leaf on one branch of one tree in the forest that Professor Frankel so expertly navigates. In this Essay, I explore the fiduciary relationship between corporate directors and officers and the shareholders they serve. I examine how the breach of fiduciary duties owed to shareholders has the power to dramatically impact non-shareholder groups. Professor Frankel accurately observes that “[f]iduciary duties are anchored in the interests of the parties to the relationship rather than the public’s interests.” But her statement ignores the expansive reach and impact of fiduciary law in general and fiduciary duty breach in particular. Corporate fiduciaries’ inattentiveness to the fiduciary obligations they owe shareholders can significantly impact non-shareholder constituencies. The breach of fiduciary duties owed to shareholders deleteriously impacts the public interest in some instances. Local and global communities can be affected by corporate fiduciaries’ breach of the obligations they owe shareholders. In this Essay, I explore the significance of this observation in the context of subprime mortgage lending and the securitization of subprime mortgages that major financial institutions undertook in the years leading up to the 2008 financial crisis. This Essay makes no contribution to the discussion about mortgage brokers and lenders and whether they owe fiduciary duties to consumers. The focus of this Essay is on the fiduciary duties that financial institution directors and managers owed their shareholders in the process of securitizing subprime mortgages. The participation of financial institution managers in the predatory subprime lending debacle that contributed to the 2008 economic downturn harmed shareholders and consumers along with local and global communities. The harm to consumers and communities has proven to be deeper and more enduring than the harm to shareholders, but the most salient aspect of my thesis is the fact that corporate fiduciary duty breaches have a pervasive impact beyond the shareholders to whom fiduciaries owe duties. The factual context explored in this Essay – financial institutions’ involvement in the securitization of subprime loans – vividly illustrates the expansive impact of fiduciary duty breach beyond corporate shareholders

Attempting to Discuss Race in Business and Corporate Law Courses and Seminars

(Excerpt) The challenges of teaching corporate social responsibility and good corporate citizenship have shifted as political and social climates have changed in New York, the United States, and around the world. I discuss some of those challenges in this Article. My primary focus, however, is the challenge of talking about race in business and corporate law courses and seminars