How activist investors hurt corporate diversity

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Why are there so few Black and women CEOs? Activist investors.

Or so says James White, the former CEO of Jamba, and Thomas Lynch, senior managing director of the private equity firm Mill Road Capital.

White recently joined Lynch’s firm to be part of its newly created Progressive Governance Fund, which seeks to improve diversity at smaller companies through targeted investments.

White and Lynch argue that activist investors ultimately hurt the long-term value of the restaurant companies they target. But they also argue that activists hurt diversity, frequently by pushing out Black or women CEOs or board members and then nominating mostly white men.

Their fund seeks to change that by taking investments in small cap companies, then helping them fight off activists while encouraging more diversity among boards.

Both White and Lynch have extensive history with the restaurant space—White at Jamba while Lynch’s Mill Road has been a frequent investor in restaurants, such as Noodles & Co. and the fast-casual chain Rubio’s. This is a fascinating episode. Please have a listen.

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