INVESTING EXPLAINED: What you need to know about chair

In this series, we bust the jargon and explain a popular investing term or theme. Here it’s chair. 

Nothing to do with furniture…

No, you’re right. But there has been a new development in the debate as to what name should be used for the executive who occupies the top seat at the boardroom table.

Is ‘chairman’ the appropriate term? Or is ‘chair’ more suitable, since the person who takes this role may now be a woman?

So what’s new?

A study from Bloomberg has been the spur. This research shows that 185 of the companies in the US S&P 500 index use ‘chair’ or ‘chairperson’ – three times as many as did so in 2020.

Among those that have made the shift are three major banks: Bank of America, JP Morgan and Wells Fargo. But Goldman Sachs, Morgan Stanley and Citi still use chairman – although Citi has a woman chief executive in Jane Fraser.

Almost half of tech groups use the term ‘chair’, including Alphabet, Amazon, Meta and Tesla.

So ‘chairman’ could become redundant?

Not so fast. As the Bloomberg study reveals, in recent months, there has been a decline in the number of companies deciding to order a change to ‘chair’.

The reasons for this are far wider than simply the desirability of gender-neutral language, however.

There is a mounting backlash against corporate ‘woke’ behaviour, with more politicians and those in business questioning the effectiveness of DEI (diversity equity inclusion) strategies that were promoted as a way to boost the employment and other opportunities of minorities.

Who are the chief spokespeople in this debate?

Elon Musk, the Tesla boss, is the most vociferous objector from the business world, arguing that ‘DEI is just another word for racism’. He argues that DEI policies ‘discriminate on the basis of race, gender and many other factors’ and so are ‘immoral and illegal’. What his chairman Robyn Denholm thinks of this stance has not been recorded.

Any other key figures?

The billionaire hedge fund boss Bill Ackman, founder and chief executive of the Pershing Square investment trust, which is a member of the FTSE 100, last year spearheaded a high-profile campaign to unseat the president of Harvard over anti-Semitism on the university’s campus.

Pershing Square has a female chairman in Anne Farlow. But it is likely that most investors will be less concerned about the choice of title for this board position than the discount on the trust. Its share price is at a 28 per cent discount to the value of its net assets.

Is chairman still the most usual term in the UK?

Having been around since the 17th century, it seems likely to stick around for a while yet. For example, the term chairman will continue to be used at John Lewis – this week, Jason Tarry replaced Dame Sharon White. However, if a woman is appointed to the role, there seems to be a preference for ‘chair’. Cressida Hogg, of BAE, and Caroline Silver, of Barratt, are ‘chairs’. In 2022, then chancellor Kwasi Kwarteng rejected a call from several bodies for the Government to replace ‘chairman’ with ‘chair’.