Corporate executives set to join effort to increase voter access in the wake of new voting laws: WSJ

In this Jan. 19, 2018, file photo, American Express Chairman and CEO Kenneth Chenault listens during an interview with The Associated Press in New York. Chenault was chief executive officer and chairman of American Express until Jan. 31. In his last interview before retiring, Chenault talked to The Associated Press about the new tax law, being a black CEO, and what greater competition means for AmEx.
Kenneth Chenault.

  • Top business leaders met on Zoom this weekend to map out their response to new voting restrictions.
  • The WSJ reported that CEOs were asked to sign a statement opposing restrictive voting legislation.
  • “This is a nonpartisan issue, this is a moral issue,” Kenneth Chenault, former CEO and Chairman of American Express, told the Journal last month.
  • See more stories on Insider’s business page.

Numerous chief executives and senior leaders met on a Zoom call this weekend to map out how businesses should respond to new voting restrictions that are set to be enacted in Texas and other states across the country, according to The Wall Street Journal.

In the wake of the controversy surrounding Georgia’s new voting law, SB 202, with Major League Baseball pulling the 2021 All-Star Game from the state and companies like Coca-Cola and Delta pushing back against restrictive voting provisions, this effort would represent a significant development in the corporate sector weighing in on voting rights.

During the call, Kenneth Chenault, the former chief executive of American Express, and Kenneth Frazier, the chief executive officer of Merck & Co., asked the leaders to “collectively call for greater voting access,” according to the Journal report.

Chenault and Frazier, two of the most prominent Black business leaders in the US, also reportedly told businesses not to walk away from the voting right issue and requested that CEOs sign a statement “opposing what they view as discriminatory legislation on voting.”

The statement from a new constellation of business leaders could be released as soon as this week, according to the Journal.

Last month, 72 Black executives signed an open letter that was featured in The New York Times, asking for companies and business leaders to offer pushback against legislation that would infringe on voting rights.

Chenault informed the business executives on the call that several leaders would back the effort, including executives at PepsiCo, PayPal Holdings, T. Rowe Price, and Hess, among other companies.

“This is a nonpartisan issue, this is a moral issue,” he told the Journal last month.

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Frazier said that as an increased number of states take up legislation similar to Georgia’s SB 202, companies have to take action.

“This is not a Georgia issue,” he told the Journal.

The Georgia law tightens election rules in the state by limiting drop boxes, strengthening voter identification requirements, and blocks the use of mobile voting vans, among other measures.

Mellody Hobson, the chairwoman of Starbucks Corp., said on the call that the controversies surrounding the new voting laws are “bad for business” and hopes that businesses can devise ways to work on voting issues, according to the Journal.

AMC CEO Adam Aron, Estée Lauder Cos. director Lynn Forester de Rothschild, and CyberCore Technologies CEO Tina Kuhn all reportedly backed the new statement, according to the Journal report.

As some companies have become increasingly vocal about voting access, Republican leaders from Gov. Brian Kemp of Georgia to Senate Minority Leader Mitch McConnell of Kentucky have railed against pushback to the new legislation.

Kemp has accused business leaders of adhering to “cancel culture” and McConnell recently warned them not to become “a vehicle for far-left mobs.”

But some companies are hesitant to jump into any hotly-debated political issue altogether, aware that any position that take could alienate a portion of their business or customer base.

“It’s really a no-win situation from a corporate standpoint,” a Fortune 100 business executive told the Journal.

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Corporate share buybacks are at a record high but capex and tax demands may slow the pace, says BofA

US dollar bill
  • A four-week average of share buybacks hit a record of nearly $2 billion, according to research from Bank of America.
  • Wall Street may be on track for $900 billion of gross S&P 500 buybacks in 2021.
  • But buybacks may slow down if companies put more cash into capital expenditures.
  • See more stories on Insider’s business page.

Share repurchases by corporations reached record highs in March, but buybacks may slow if companies decide to swing their cash into capital expenditures or if they adhere to tax regulations stemming from the government’s stimulus efforts, said Bank of America.

The four-week average of repurchases by corporate clients hit record highs “after a big resurgence in buybacks this month” that put transactions at nearly $2 billion, said a team of equity and quant strategists led by Jill Carey Hall in a research note released Wednesday.

If corporate client buybacks continue at the pace of $21 billion year-to-date or more than $80 billion annualized, that would imply more than $900 billion of gross S&P 500 buybacks in 2021, the strategists said. It said it based that figure on a roughly 9% average share of S&P buybacks over the last five years.

“This would be above 2018’s peak $800 billion levels and nearly double 2020’s depressed $500 billion levels, suggesting upside risk to our forecast for no net EPS impact from buybacks to the S&P,” BofA said.

Recent repurchases have been prominent in the tech sector, with near-record buybacks in each of the last six weeks.

However, the strong pace of overall stock repurchases “may not persist if cash deployment priorities shift more toward capex, which investors want and where corporates have underinvested,” said BofA. It referenced its Fund Managers Survey issued March 16 that showed “investors now want capex” and not buybacks or debt reduction.

“We see multiple tailwinds for capex including the cyclical rebound, a potential infrastructure bill and US re-shoring,” or relocations by companies back in the US, Carey Hall said.

President Joe Biden is set later Wednesday to unveil a $2 trillion infrastructure bill that’s expected to focus on investments including in roads, bridges, and broadband.

“What else can curtail buybacks? Payback for stimulus (i.e., higher taxes) which could cost 5-10% EPS growth,” said BofA.

Biden is expected to propose that his eight-year infrastructure plan be paid for with tax hikes on corporations. Earlier this month, Biden signed off on a $1.9 trillion fiscal stimulus package.

BofA said single-stock corporate buybacks in tech last week hit roughly $1.61 billion. March was a relatively rough month for large-cap tech shares as investors rotated from the high-flying group and into small-cap and cyclical shares. The rotation has been stoked in part by the vaccination of millions of Americans that’s been leading more businesses to resume normal operations.

BofA said it’s starting to see a pickup in buybacks in other sectors including consumer discretionary, health care and financials. The Federal Reserve said last week that as of June 30 it will lift share buyback and dividend-payout restrictions on banks that pass stress tests. The Fed last year imposed the restrictions as a way to safeguard the financial system in the face of the COVID-19 pandemic.

Last week, corporate buybacks reached $143 million for consumer discretionary stocks and $119 million in health care shares, BofA data shows.

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