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North American Edition
9th June 2021
Racial diversity stagnated on corporate boards
Progress on increasing racial diversity on boards of directors stagnated in the two years before the May 2020 police killing of George Floyd and ensuing racial justice protests precipitated a rush by many U.S. companies to appoint Black members, according to a new study. The study, conducted by the Alliance of Board Diversity and consulting firm Deloitte, identifies the steep deficit  to fulfilling corporate pledges to diversity: among Fortune 500 company boards, 82.5% of directors are white. Before the events of May 2020 and their aftermath, the study suggests that attention to gender equality in boardrooms overshadowed racial diversity. Between July 2020 and May 2021, 32% of newly appointed board members in the S&P 500 were Black, according to an analysis by ISS Corporate Solutions, compared to 11% during the previous year. But the Missing Pieces Report by the Alliance of Board Diversity and Deloitte found that the number of women serving on Fortune 500 boards rose 4 percentage points to 26.5% between 2018 and June of 2020. In contrast, the number of racial minorities on Fortune 500 boards increased by just above a percentage point – a slower pace than the 2% increase during the previous two years. Moreover, the number of Black men on Fortune 500 boards declined by 1.5% between 2018 and June 2020, even as the representation of Black women grew by 18%.
IRS leak reveals details of U.S. super-rich
Calls for a wealth tax on the super-rich have grown after a trove of tax data from the US Internal Revenue Service was leaked to the investigative journalism organisation ProPublica revealing the tax returns of some of the world's richest people, including Jeff Bezos, Elon Musk, Warren Buffett and George Soros. ProPublica calculated the wealth of the 25 richest Americans collectively jumped by $401bn from 2014 to 2018. They paid, according to ProPublica, $13.6bn in federal income taxes over those years - equal to just 3.4% of the increase in their overall fortunes. Using tax strategies which are perfectly legal, Jeff Bezos paid no income tax at all in 2007 and 2011, George Soros went three straight years without paying federal income tax, while Elon Musk paid nothing in 2018. The leak, which is being investigated by authorities, has prompted the likes of Senators Elizabeth Warren and Bernie Sanders to demand President Joe Biden introduce a wealth tax in America “to make the ultra-rich finally pay their fair share.”
Companies lengthen time taken to pay suppliers
Big U.S. companies on average took 58 days to pay suppliers in their first quarters of fiscal 2021, up 5.5% from 55 days in the comparable period last year, according to research from Hackett Group. For fiscal 2020, businesses took 62 days on average to settle their dues with suppliers, up 7.6% from the previous year. Macy’s took 163 days on average to settle its bills during the first quarter, up from 134 days a year earlier. The company, which is shutting stores and cutting staff to boost its finances, said it uses a different formula to calculate the time it takes to pay suppliers, resulting in a fewer number of days, but still showing an increase from a year earlier. Mondelez International, meanwhile, took 130 days to pay suppliers during the first quarter, up from 122 days a year earlier, after streamlining processes and terms, and introducing a different formula to calculate its days payable. Companies, however, must walk a fine line between pushing for better payment terms and imposing financial strain on their suppliers, warned Andrew Schmidt, an accounting professor at North Carolina State University. “It’s a double-edged sword,” he added.
Trade deficit narrows amid supply chain issues
The U.S. trade deficit narrowed in April from a record level in March as disruptions in global supply chains and a slowdown in consumer spending contributed to a drop in imports. The deficit in trade of goods and services shrank by 8.2% to a seasonally adjusted $68.9bn in April, the Commerce Department said Tuesday, compared with the record $75bn gap in March. Imports fell 1.4% to $273.9bn, while exports grew 1.1% to $205bn. A declining appetite for imported consumer goods led the import decline. That category fell by $2.6bn, driven largely by a $1.7bn drop in cellphones and other household goods. Automotive vehicles, parts and engines also decreased $1.1bn at a time when a semiconductor shortage has hampered production and caused shutdowns at some auto plants. Services imports actually increased $700m for the month, thanks to boosts from travel and transport.
Millennials are 'running out of time to build wealth'
In almost every way measurable, millennials in the U.S. at 40 are doing worse financially than the generations that came before them, reports Bloomberg. Fewer millennials own homes than their parents did at their age, and they have more debt - especially student debt. Meanwhile, because the life expectancy of the American population is on the rise, millennials receive family inheritances — if available to them — later in life, which could account for why people turning 40 today have lower net worth than generations prior. By then, “it might be too late for them to take advantage of it and meet some of those mid-life goals that wealth really helps with achieving,” such as owning a home, investing in the stock market and paying down debt, St. Louis Fed data scientist Lowell Ricketts said. 
Airline automates some recruiting tasks to speed hiring process
Southwest Airlines is investing in digital job placement tools, including chatbots, to expedite the hiring process amid resurging demand as air travel takes off and a competitive labor market. “The labor market is probably as tough as I’ve ever seen it, and so we’ve got to be able to move with speed, and that’s where all these tools come into play,” said Greg Muccio, the carrier’s director of talent acquisition. Southwest uses a platform from Phenom People that powers the company’s careers site, and uses artificial intelligence to target job postings and messaging to potential candidates. Some video interviews have been conducted via Zoom and Microsoft but the airline expects to move to a videoconferencing tool that is part of the Phenom platform to take advantage of archiving capabilities and keep all recruiting tools in one place. Phenom CEO Mahe Bayireddi says the company's platform also features deep-learning algorithms that can score job candidates based on their skills and experiences and help recruiters decide which candidates should be prioritized, although Mr Muccio said these capabilities won’t be used because he prefers that humans control that part of the recruitment process.
U.S. banks outpace Europeans in return to the office
European banks including Barclays, Deutsche Bank and HSBC are taking a more relaxed approach than American peers such as JPMorgan and Goldman Sachs when it comes to a return to the office, reports Reuters, which surmises that Wall Street bankers who are back behind their desks might win more facetime with clients, and an even greater share of deals. U.S. bank staff “may now find themselves at an advantage as their offices fill up: colleagues can quickly share ideas or deal gossip; more frequent face-to-face meetings with clients help to build trust.”
Permission given for ex-Plated shareholders to sue Albertsons
Former shareholders of Plated can pursue a narrowed breach of contract suit accusing Albertsons of intentionally preventing the meal kit company from receiving some payments related to its acquisition by the grocery chain, the Delaware Court of Chancery has ruled. The supermarket group said at the time of the deal that the acquisition would add meal prep kits to the shelves of the more than 2,300 stores, according to the deal announcement. According to the lawsuit,  Albertsons had promised to support and bolster Plated's subscription business during merger talks but after the deal closed it began devoting Plated’s resources to serving the grocer’s brick-and-mortar stores to allegedly avoid the milestone payments in violation of the merger agreement.
SEC Chair calls for added restrictions on executive stock-trading plans
The SEC is drafting a proposal that would restrict plans that corporate insiders use to avoid insider-trading claims when buying or selling their own company’s stock. Chairman Gary Gensler said he is seeking to revise rules that govern the arrangements, known as 10b5-1 plans. Insiders set up plans ahead of time and use them to schedule future trades. The arrangement gives executives a defense against insider-trading claims that would stem from having undisclosed material nonpublic information at the time of a trade. However, such plans have attracted criticism because there is no required public disclosure of a plan at the time an insider sets one up. Some investors say plans can be manipulated because, for instance, executives can modify or cancel them. Mr. Gensler suggested Monday that rule changes are now due. “In my view, these plans have led to real cracks in our insider-trading regime,” he said. He added that regulators would “ensure we are identifying and punishing abuses of 10b5-1 plans” under the current rule. An SEC proposal could try to reduce the risk of improper trading by requiring insiders to wait four to six months after a plan’s conception before trading; putting limits on plan cancellations or modifications; disclosing their adoption and any changes; and curbing the number of plans that executives can set up.
China law aims to counter U.S.
Chinese lawmakers have filed the second draft of a law aimed at countering sanctions imposed by foreign governments. State-owned news agency Xinhua said the anti-sanctions legislation would provide legal support for countering “discriminatory measures by a foreign country in accordance with the law.” Bloomberg says the move is indicative of China following through on a March vow to expand Beijing’s legal toolkit as it confronts the U.S. on issues including claims of human rights abuses in the western Xinjiang region to limitations on technology that China can import. “This is about reducing U.S. hegemonic thinking and actions,” observed Mei Xinyu, part of a research group under the Ministry of Commerce in Beijing.  “It is also a warning for countries that follow the U.S. in encroaching on China's rights and a reminder that there is a price to pay for unjustifiable actions toward China. ”
Twenty-five states introduce personal finance education in 2021
So far in 2021, 25 states in the U.S. have introduced legislation that would add personal finance education to their high school curriculum. Bills in Arkansas, Hawaii and Nebraska have been passed this year and signed into law, while measures in four more states, Colorado, Nevada, Rhode Island and Texas, have passed and are awaiting governors’ signatures. Seven states - Virginia, Alabama, Tennessee, Missouri, Utah, North Carolina and Mississippi - have what Next Gen Personal Finance, which carried out the review, refers to as the gold standard of personal finance education: a standalone half-semester course that focuses on only personal finance. Beyond that, some 21 states require some personal finance education, but say it can be incorporated into another course. “In recent years, I haven’t seen this many [bills] that have been significant and that have made it to the governor’s desk,” Next Gen co-founder Tim Ranzetta said. “There’s a sense that some folks are being left behind, and the pandemic kind of exacerbated some of those structural issues,” he added. “And while financial education isn’t the silver bullet, or isn’t the panacea for those issues, it’s an important skill for young people to develop.”

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