Jan 24, 2020

Goldman's baby step in the right direction on board diversity

Illustration: Aïda Amer/Axios

Goldman Sachs announced Thursday that it won't help take European and North American companies public unless they have at least one "diverse" board director, effective July 1.

The big picture: In general, this is a positive development. Board diversity has been shown to improve company performance, per numerous academic studies, and far too many issuers continue to rely on bogus "pipeline" or meritocracy excuses for their boardroom homogeny.

  • A bank spokesperson confirms to Axios that "diverse" means anyone who isn't a straight, white male.
  • And a quick grammatical nit: "Diverse" shouldn't be used to describe an individual. A group can be diverse, but one person cannot.

What they're saying: Goldman CEO David Solomon said on TV yesterday that around 60 companies in the past two years have gone public with all-white, all-male boards. He didn't address the sexual orientation piece in there, and I'm unsure as to how Goldman plans to handle it.

  • If Goldman can help make a difference in the right direction, even a small one, then good on them.

Yes, but: Don't pat Goldman too hard on the back.

  • All California-based public companies already are required by state law to have at least one woman director by year-end.
  • Goldman did not reach out to other major investment banks ahead of this announcement, trying to get their buy-in. Doing so would have significantly furthered its stated objective, and felt like less of a PR push.

The state of play: This new policy will apply to both IPOs and direct listings in which Goldman is a participant (i.e., Goldman needn't be lead left manager). It's unclear if it also will apply to Goldman's private capital fundraising practice, or how the firm will handle Asia, Africa, and South American issuers.

  • I did a quick review of on-file IPO issuers with Goldman on their books, and didn't find one that would run afoul of the diversity mandate. This includes Jamf Software, which Bloomberg reports just filed confidentially with Goldman as lead.

The bottom line is that Goldman has done something virtuous, and also that it could have done something even better. Perhaps by not building a Wall Street coalition, it will cause rivals like Morgan Stanley and J.P. Morgan to raise the ante. If so, everyone wins.

Go deeper: 63% of directors say investors pay too much attention to corporate board gender diversity

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Goldman Sachs CEO says bank won't take companies public without one female or minority board candidate

Goldman Sachs CEO David Solomon. Photo: Michael Kovac/Getty Images

Goldman Sachs CEO David Solomon told CNBC Thursday the investment bank won't help companies go public unless they have at least one diverse board candidate, “with a focus on women,” starting in July.

Why it matters: Government and shareholders are pressing public companies to put more women on boards. Goldman’s announcement will push some private companies to think about diversifying their boards before going public.

Go deeperArrowJan 23, 2020

Goldman Sachs holds its first investor day

Photo: Ramin Talaie/Corbis via Getty Images

For the first time in its 151-year history, Goldman Sachs, the storied investment bank, opened its doors to investors and others for a day of presentations about its various business lines — and how it has been remaking itself.

Why it matters: David Solomon has been CEO for just more than a year, and under him, the bank has pivoted toward the mass market and making other strategic moves that could have a big effect on the evolution of modern banking.

Go deeperArrowUpdated Jan 29, 2020

Goldman banker banned from industry amid 1MDB scandal

Illustration: Lazaro Gamio/Axios

Andrea Vella, the former co-head of investment banking at Goldman Sachs Asia, has been banned from the banking industry for life by the Federal Reserve Board.

Why it matters: Goldman Sachs faces billions of dollars in fines for helping facilitate the "heist of the century" in Malaysia. Vella "engaged in unsafe and unsound practices," says the Fed, by failing to properly escalate concerns about Jho Low, the financier who masterminded the scheme and who is now a fugitive.