MCCA® 2010 Fortune 1000 Minority General Counsel Survey
The U.S. economy is stumbling along with persistent job losses and dire warnings of a double-dip recession, but the big story for the 2010 class of the Fortune 500 is the stunning 335% increase in earnings— a jump of $301 billion over the previous year. Perhaps more surprising is that this massive earnings increase occurred despite a sharp fall in revenues. Sales by Fortune 500 companies fell 8.7% to $9.8 trillion, the biggest decline since the early 1980s1. But while corporate cost-cutting dictated job losses at many Fortune 500 firms, for the most part, minority general counsel managed to avoid the pain.
As the gross domestic product shrank by around 6% in 2008 and early 2009, and sales decreased alarmingly, companies responded by furiously slashing costs. Since about two-thirds of company costs come from labor, that meant job losses. Fortune 500 companies cut 821,000 jobs in 2009, a 3.2% reduction in payroll, which is the biggest reduction of its kind in the history of the list. With only modest increases in wages for 2009, the labor costs for American companies fell by 4.6%, the biggest drop in postwar history. Companies maintained this iron grip on costs to offset overall revenue shortfalls as economic growth finally returned late last year, leading to the massive increase in profits. Increased sales and falling unit labor costs resulted in healthy bottom lines in the Fortune 500.2
With consumers searching for bargains and shunning discretionary purchases, electronics retailers and auto-parts suppliers were punished, but budget-conscious Walmart was rewarded for its low prices with a 7% surge in earnings to $14.3 billion. Overall, 2009 was a good year for Fortune 500 companies selling products consumers considered essential, but a bad year for those selling items customers merely wanted to have.3
Forty-three companies on the 2010 Fortune 500 list employed minorities as general counsel (8.6 percent), an increase of two over the previous year and up six from 2008. Of those 45 minority general counsel, 25 are African Americans, 11 are Asian Americans and seven are Hispanic Americans. Overall, the number of African American general counsel in the Fortune 500 is down one from 2009, but Hispanics have increased their number by two.
Increasingly, women of color are also taking the lead of Fortune 500 legal departments. In 2008 and 2009 eight women of color held the position of general counsel, but that number increased to 11 on the 2010 list. Of those 12 women, seven are African Americans, three are Hispanic Americans, and one is Asian American. Compared to 2009, African American women increased their number by two and Hispanic American women increased their number by one.
At the Fortune 250 level, 28 companies are represented by a minority general counsel, an increase of one over 2009. Fifteen of these are African Americans, six are Hispanic American, and another six are Asian American.
As evidence of the progress made, some of the most famous companies in the United States have legal departments run by persons of color. Among them are: Dell (Lawrence Tu), United Parcel Service (Teri Plummer-McClure), Sears Holdings (William Harker), PepsiCo (Larry Thompson), Google (David Drummond), McDonald’s (Gloria Santona), Xerox (Don Liu), General Mills (Roderick A. Palmore), Sara Lee (Brett Hart), Avon Products (Kim Rucker), Starbucks (Paula Boggs), Dole Food (Michael Carter), Avis Budget Group (Michael K. Tucker), and Western Union (Martin J. Wong).
Of the 2010 Fortune 500 companies with chief legal officers of color, 13 had revenues of at least $20 billion, a drop of 3 from 2009. Fourteen companies on the list had revenues between $10 billion and $20 billion, thirteen companies had revenues between $5 billion and $10 billion, and five companies had revenues under $5 billion. Of the 45 Fortune 500 companies with minority general counsel, only six were not profitable in 2010.
Some of the best performing companies on the 2010 Fortune 500 list are represented by minority general counsel. For example, five of the most profitable companies in America were Bristol-Myers Squibb (GC Sandra Leung), Google (GC David Drummond), Liberty Media (GC Charles Tanabe), PepsiCo (GC Larry Thompson), and McDonald’s (GC Gloria Santona).
Among the 20 fastest-growing companies on the Fortune 500, persons of color run the legal departments of four, including William Harker at Sears Holdings, John Chou at Amerisource Bergen, Don Liu at Xerox, and Douglas Williams at Limited Brands. Bristol-Myers Squibb and Google also made the list of fastest growing companies on the 2010 Fortune 500.
Liberty Media, with GC Charles Tanabe, offered the most return on revenues of any company in the 2010 Fortune 500 list and Bristol-Myers Squibb (GC Sandra Leung) offered the second highest return on revenue. Google (GC David Drummond) made the top 10 list in return on revenue and McDonald’s (GC Gloria Santona), Spectra Energy (GC Reginald Hedgebeth), and Western Union (GC Martin J. Wong) were also high on that list. For total return to shareholders, no company in the Fortune 500 performed better in 2009 than Avis Budget Group, where Michael K. Tucker is general counsel. ArvinMeritor (GC Vernon Baker) and Starbucks (GC Paula Boggs) were also exceptional performers.
Fortune 500 general counsel of color are a geographically diverse group. California is home to 10 minority general counsel-led companies, tops on the list and an increase of one from 2009. Moving into second place this year is Illinois, home to seven companies on the list. New York falls from second to third with six companies employing minority general counsel on the Fortune 500. States such as Texas, Pennsylvania, Ohio, Florida, and Colorado were also represented by multiple companies with minority chief legal officers.
Fortune 500 Departures and Arrivals
Newcomers to the Fortune 500 list of minority chief legal officers include African Americans Michael K. Tucker of Avis Budget Group [409 overall], who replaced a white female in May 2010, and Keith Williamson, who runs the legal department of Centene, which moved from 609 last year to 486 on this year’s list.
With five, California is once again home to the highest number of general counsels of color at Fortune 1000 companies. New Jersey is home to four companies on the list and the rest are spread fairly evenly around the country, with New York, Florida, Ohio, Pennsylvania, and Texas among the states with multiple companies employing minority general counsel. The list also includes a company from Puerto Rico and one from Washington, D.C.
Fortune 1000 Newcomers
1 Shawn Tully, Fortune 500: Profits bounce back, Fortune, April 15, 2010, available at money.cnn.com/2010/04/13/news/companies/fortune_500_profits.fortune/index.htm (visited June 18, 2010).
In this article, the term "Fortune 1000" refers to companies ranked among Fortune's 501-1000 companies.
From the September/October 2010 issue of Diversity & The Bar®