Black CEO Ranks Dwindle With Ken Frazier's Exit

(Bloomberg) -- Ken Frazier's retirement as chief executive officer of pharmaceutical maker Merck & Co. points to the fragility of gains for senior Black executives at major U.S. corporations, which have pledged to increase representation of minorities in the C-suite.

The number of Black CEOs in the S&P 500 will rise to six when Roz Brewer takes over as Walgreens Boots Alliance Inc. on March 15 but then fall again to five, assuming no other changes, when Frazier steps down after a decade in the job. Frazier, who will be succeeded by a White man, will become the drugmaker's executive chairman. That leaves Arnold Donald at cruise company Carnival Corp. as the longest-serving Black CEO in the index, at almost eight years. Craig Arnold at Eaton Corp., Rene Jones at M&T Bank Corp. and Marvin Ellison at Lowe's Cos. round out the list. Brewer will be the lone woman.

“The remedy to this is a deeper bench of CEO-ready people who happen to be Black,” said Michael Hyter, chief diversity officer at consulting firm Korn Ferry, who on March 1 will become the CEO of the Executive Leadership Council, a group that advocates for Black executives in leadership roles. 

Companies came under renewed pressure from investors, employees and activists to increase workforce diversity and give more opportunities to minorities after the May 2020 police killing of George Floyd sparked nationwide protests. But gains have been sluggish, at best, and the number of Black CEOs has actually declined since 2015. 

The decline is largely the result of attrition of Black CEOs. Ken Chenault stepped down in 2018 at American Express Co., while Jide Zeitlin, the CEO of Tapestry Inc., parent of Coach and Kate Spade, left last year amid misconduct allegations. Both were replaced by White executives.

In another sign of the dry spell, Brewer will be the first Black female CEO in the S&P 500 since Ursula Burns left Xerox Holdings Corp. in 2016. 

Frazier wasn't available for comment Thursday and didn't address diversity in remarks to the investors about his decision to retire. He has been outspoken in the past about the need to address the inequity faced by the Black community, describing the killing of George Floyd at the hands of police as “less than human.” His leadership team includes two women, two Black men and two Asian men. Merck Chief Commercial Officer Frank Clyburn, who is Black, had been  seen as one of the executives potentially in the running to replace Frazier. 

Frazier remains as co-chair of the OneTen initiative, along with former International Business Machines Corp. Executive Chairman Ginni Rometty. The group is made up of companies that have pledged to hire 1 million Black workers without four-year college degrees during the next decade in jobs paying an average of $50,000 a year. 

Brewer's route to the top job at Walgreens should be the template for future leaders, said Hyter, the incoming CEO at the Executive Leadership Council. Brewer had held key jobs at Walmart Inc. and Starbucks, with division responsibility for profit and loss, putting her on the traditional track to be a big-company CEO, he said. One possibility is that well-meaning managers are slower to put Black executives in high-risk situations for fear of hurting their careers, he said.

“Someone made a bet on Roz, and she did it successfully, so there is no question about her credibility and capability,'' Hyter said. “I just want to see it happen 10 to 20 times more often for people like her than it does now. We need to get to the point where the Roz Brewer news is outpacing the Ken Frazier news.”

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