The U.S. Court of Appeals for the Eleventh Circuit affirmed an injunction against enforcement of portions of Florida’s “anti-woke” law, which prohibits employers from requiring employees to attend training sessions or other activities that “espouse” or “promote” eight “concepts” relating to race, color, sex, or national origin. The unanimous decision in Honeyfund.com, Inc. v. Governor, State of Florida (11th Cir. Mar. 4, 2024) held that the Florida statute draws “distinctions based on viewpoint – the most pernicious forms of dividing lines under the First Amendment” – and cannot be sustained as an “attempt to control speech by recharacterizing it as conduct.”

Well – this took four months. The U.S. Court of Appeals for the Fifth Circuit ordered en banc rehearing of an unsuccessful challenge to the Securities and Exchange Commission’s approval of the Nasdaq Stock Market’s rules concerning diversity of directors on boards of Nasdaq-listed companies. The rules – which a panel of the Fifth Circuit upheld in October 2023 – require listed companies to disclose director-diversity information and either to have a certain number of diverse directors or to explain why not. We blogged about that decision here.

The U.S. Court of Appeals for the Fifth Circuit denied review of the Securities and Exchange Commission’s approval of proposed rules promulgated by the Nasdaq Stock Market concerning the diversity of directors on Nasdaq-listed companies’ boards. The rules require listed companies to disclose director-diversity information and either to have a certain number of diverse directors or to explain why not. The decision in Alliance for Fair Board Recruitment v. SEC held that the rules do not violate the Constitution and that the SEC did not violate its statutory obligations in approving them.

The Nasdaq rules do not require board diversity; they require only disclosures and explanations. But the need to comply with the rules could have the practical effect of increasing diversity on boards of Nasdaq-listed companies.

A new study has found that diversity on corporate boards of directors leads to statistically significant increases in the representation of under-represented groups at the manager and staff level.  The study – “Do Diverse Directors Influence DEI Outcomes?” by Wei Cai (Columbia Graduate School of Business), Aiyesha Dey (Harvard Business School), Jillian Grennan (Santa Clara University and UC-Berkeley), Joseph Pacelli (Harvard Business School), and Lin Qiu (Purdue University) – adds to the growing literature on board diversity and human capital management, two significant ESG considerations for many corporations and investors.  While proponents of ESG sometimes focus on advancing each of those goals individually, the study links the two considerations and shows that one of them (board diversity) can promote at least some aspects of the other (diversity, equity, and inclusion in the workforce).

On August 25, 2022, the Securities and Exchange Commission, in a 3-2 vote, adopted a new disclosure rule implementing the Dodd-Frank Act’s requirement that public companies disclose the relationship between compensation paid to executives and the company’s financial performance. SEC Chair Gary Gensler’s stated purpose of the new rule, commonly known as the “pay versus performance” disclosure requirement, is to promote transparency and make it easier for shareholders to assess a public company’s decision-making with respect to its executive compensation policies. 

In a new skirmish in the volatile ESG and culture wars, a Florida federal court preliminarily enjoined enforcement of portions of Florida’s “anti-woke” law, which prohibits employers from requiring employees to attend training sessions or other activities that “espouse” or “promote” eight “concepts” relating to race, color, sex, or national origin.  U.S. District Judge Mark Walker held in Honeyfund.com, Inc. v. DeSantis (N.D. Fla. Aug. 18, 2022), that the statute is a “naked viewpoint-based regulation on speech,” in violation of the First Amendment, and also is unconstitutionally vague.

In an era where TikTok stars outearn scores of CEOs of top earning publicly traded companies, executive compensation is no less important to the investing public or to companies striving to attract and retain top talent. Indeed, just this year the CEO of Starbucks received a 39% pay increase. Such soaring executive compensation has not escaped the notice of the SEC.