Nasdaq seeks mandatory rule on board diversity for companies
The Nasdaq stock exchange is seeking U.S. authority to require more diversity in the boardrooms of Nasdaq-listed companies, or for those companies to explain why they can not.
It is the first major exchange to pursue such a requirement.
The proposal filed with the U.S. Securities and Exchange Commission on Tuesday, if approved, would require all companies listed on the exchange to publicly disclose consistent, transparent diversity statistics about their board of directors.
It would require most Nasdaq-listed companies to have, or explain why they don’t have, at least two diverse directors. This includes having one board member who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ. Foreign companies and smaller reporting companies would have additional flexibility.
Corporate boards are overwhelmingly white and male.
According to the 2018 Board Diversity Census from the Alliance for Board Diversity and the consulting firm Deloitte, women held just 22% of Fortune 500 seats in 2018, compared to 20% a year earlier and 16 percent in 2010. White men held 66% of Fortune 500 board seats in 2018. Blacks held nearly 9% of seats in 2018, compared with nearly 8% in 2010.
“We’re taking the leadership here because there has been so little action on this front, and we do think it’s an important thing for us to do, to create a more inclusive capitalist society and we think this is a step forward,'” said CEO Adena Friedman on CNBC. “But we would welcome the opportunity for for the New York Stock Exchange and for the SEC to take an active role here as well.”
Companies that do not meet the diversity requirement will not be delisted from Nasdaq, Friedman said, but they will have to outline the obstructions to doing so.
The Nasdaq contains all of companies that trade on the exchange, more than 3,300 of them. It is dominated by technology companies, but there are a lot of financial, biotech and industrial companies as well. It is the second largest exchange by market capitalization, behind the New York Stock Exchange.
Nasdaq said the proposal’s goal is to give stakeholders a better understanding of a company’s current board composition and to bolster investor confidence that all listed companies are considering diversity when the look for new board members.
The proposal would require all Nasdaq-listed companies to publicly disclose board-level diversity statistics through Nasdaq’s proposed disclosure framework within one year of the SEC’s approval of the listing rule.
All companies will be expected to have one diverse director within two years of the SEC’s approval of the listing rule. Companies listed on the Nasdaq Global Select Market and Nasdaq Global Market will be expected to have two diverse directors within four years of listing rule approval. Companies listed on the Nasdaq Capital Market will be expected to have two diverse directors within five years of the SEC’s approval.
Companies that can’t meet the board composition objectives within the required timeframes won’t be subject to delisting if they provide a public explanation of their reasons for not meeting the objectives.
Nasdaq began in 1971 with the world’s first electronic stock market. It currently has more than 4,000 company listings on its exchange. The Nasdaq has been a destination for many tech companies, including Apple, which launched its initial public offering on the exchange in 1980. Some other tech companies its drawn in include Microsoft, Cisco, Amazon and Google, which is now part of Alphabet.
Nasdaq named Adena Friedman as its CEO in 2016, the first woman to lead a major U.S. exchange.
Seems easy enough. Get one board member to "identify" as a giraffe or whatever BS the NASDAQ is asking for and another to "identify" as an orangutan or whatever.
That's the idiocy of requiring something that cannot be proven.
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Posts: 8000 | Location: East Central FL | Registered: January 05, 2009
I'd love to see companies fail to comply, and then their public explanation be: "We believe in appointing directors whose qualifications and vision are best for the company, its shareholders, and its customers, regardless of their race, gender, religion, or sexual orientation."
Nasdaq began in 1971 with the world’s first electronic stock market. It currently has more than 4,000 company listings on its exchange. The Nasdaq has been a destination for many tech companies, including Apple, which launched its initial public offering on the exchange in 1980. Some other tech companies its drawn in include Microsoft, Cisco, Amazon and Google, which is now part of Alphabet.
Imagine the hilarity that ensues when these diversity champion companies have to dismiss white males from the board room that have been there since the beginning of the company, in the name of gender neutrality they have been pushing on everyone....
We'll find out how much they covet the title of most gender friendly they are when it costs directors positions...
Posts: 23448 | Location: Florida | Registered: November 07, 2008
Originally posted by HRK: We'll find out how much they covet the title of most gender friendly they are when it costs directors positions...
Or when it begins to affect investors' bottom lines.
"America is at that awkward stage. It's too late to work within the system,,,, but too early to shoot the bastards." -- Claire Wolfe "If we let things terrify us, life will not be worth living." -- Seneca the Younger, Roman Stoic philosopher
On any given day, ex-lawmakers stalk the corridors of the Capitol complex, ... it's not what draws high-paying companies to them: They want the relationships. ... least 187 of his political appointees are former federal lobbyists, according to ... director and former Republican congressman from South Carolina.
Directors are often former politicians for obvious reasons in addition to lobbyists.
Posts: 17235 | Location: Stuck at home | Registered: January 02, 2015
excellent plan Adena, what an asset to the company that lists other companies...impossibly unique position your in to make change. to use your irreplaceable platform to enforce REAL change...
favorite lines: It would require most Nasdaq-listed companies to have, or explain why they don’t have, at least two diverse directors.
most eh? who gets a pass? hopefully you all dont have any close ties to your exception list..
Companies that do not meet the diversity requirement will not be delisted from Nasdaq, Friedman said, but they will have to outline the obstructions to doing so.
so only downside is they will put an * next to your listing for the special note of "super racists". excellent. cant wait to not invest in them based on the weighted value of this *. helps me make decisions, oh no wait I like money more than your "progress". Guess its back to evaluating stocks the old fashioned way...
Posts: 775 | Location: FL | Registered: November 17, 2009
Originally posted by HRK: We'll find out how much they covet the title of most gender friendly they are when it costs directors positions...
Or when it begins to affect investors' bottom lines.
I hope stock value lowers and white directors get purged. I hope its a shit sandwich for both investors and the displaced. That may be the only way a meaningful pushback against this madness can happen.
Posts: 3147 | Location: Manheim, PA | Registered: September 04, 2007
It literally sounds like a blatant attack on fiduciary responsibility. I want the board of companies I own stock in to be effective. Not diverse. It might be diverse but effective is the crucial element.
Posts: 7473 | Location: Florida | Registered: June 18, 2005
Originally posted by divil: I hope stock value lowers and white directors get purged. I hope its a shit sandwich for both investors and the displaced. That may be the only way a meaningful pushback against this madness can happen.
Nope. Because if history is any indication, when leftist policies inevitably fail, the left scratches their heads and concludes that they obviously just didn't go far enough left, and they then redouble their efforts to implement it even further.
A mechanical contractor I know had to employ two (2) diverse workers for a contract that had federal money involved. The contractor satisfied it with one (1) female of minority status.
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Posts: 6314 | Location: Oregon | Registered: September 01, 2001
So NASDAQ no longer feels that the best and brightest means anything in the business world?
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Posts: 8100 | Location: Livingston County Michigan USA | Registered: August 11, 2002
Twelve board members, mostly white men and three women. I suggest they fire half the men and replace them with minorities. Then you can worry about making demands of others.
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Posts: 37957 | Location: Above the snow line in Michigan | Registered: May 21, 2004
NASDAQ isn't the only game in town, and in the timeframe set any of a number of alternatives could spring up, if enough big companies wanted to jump ship to an exchange that respected results instead of racial profiling.
Posts: 15029 | Location: North Carolina | Registered: October 15, 2007
Originally posted by RogueJSK: I'd love to see companies fail to comply, and then their public explanation be: "We believe in appointing directors whose qualifications and vision are best for the company, its shareholders, and its customers, regardless of their race, gender, religion, or sexual orientation."
Not Board related, but reminds me of my final interview for a full time professorship at a CA college. The "Diversity Officer" asked me how I promote diversity in the classroom. My response was that I recognize and accept all various cultures, will work with such, I try to emphasize on what makes us the same, what brings us together (ie, we are there to learn business) rather than focus on what makes us different. Wrong answer.
"Liberty lies in the hearts of men and women. When it dies there, no constitution, no law, no court can save it....While it lies there, it needs no constitution, no law, no court to save it" - Judge Learned Hand, May 1944
Posts: 30668 | Location: UT | Registered: November 11, 2003
