Nasdaq desires to make boardroom variety a should for listed corporations | US & Canada Information
In a pioneering move against the white male status quo on corporate boards, the Nasdaq exchange is asking the US government to require all publicly traded companies to disclose diversity statistics for their boardrooms.
In a first for a major exchange, the Nasdaq exchange seeks the authority of the United States to demand or explain why this is not possible in the boardrooms of Nasdaq-listed companies.
The proposal, filed Tuesday with the Securities and Exchange Commission, if approved, would require all listed companies to publicly disclose consistent, transparent diversity statistics through their board of directors.
Most Nasdaq-listed companies would have to have at least two different directors or explain why they don’t. This includes one board member who identifies himself as female and one who identifies as either an underrepresented minority or LGBTQ. Foreign companies and smaller reporting companies would have additional flexibility to meet this requirement with two female directors.
Company boards are predominantly white and male.
According to the 2018 Board Diversity Census by the Alliance for Board Diversity and the consulting firm Deloitte, women owned only 22 percent of the Fortune 500 seats in 2018, compared to 20 percent the previous year and 16 percent in 2010. White men owned 66 percent of the Fortune 500 seats. Board seats in 2018. Blacks held nearly 9 percent of the seats in 2018, compared to nearly 8 percent in 2010.
“This proposal and partnership provides an opportunity for companies to make progress in increasing the representation of women, underrepresented minorities and the LGBTQ + community on their boards,” said Nelson Griggs, president of the Nasdaq Stock Exchange, in a prepared statement. “The diversity of companies at all levels opens up a clear path to innovation and growth. We are inspired by the support of our issuers and the financial community in this effort, and look forward to working with companies of all sizes to create stronger, more inclusive bodies. “
Nasdaq includes all of the companies that trade on the stock exchange, more than 3,300 of them. It is dominated by technology companies, but there are also many financial, biotech, and industrial companies.
Nasdaq said the aim of the proposal is to give stakeholders a better understanding of the current makeup of a company’s board of directors and to build investor confidence that all public companies consider diversity when looking for new board members.
The proposal would require all Nasdaq-listed companies to publicly disclose board-level diversity statistics within one year of the SEC’s approval of the listing rule through Nasdaq’s proposed disclosure framework.
All companies are expected to have a diverse director within two years of the SEC’s approval of the listing rule. Companies listed on the Nasdaq Global Select Market and the Nasdaq Global Market are expected to have two different directors within four years of the listing rules being approved. Companies listed on the Nasdaq Capital Market are expected to have two different directors within five years of SEC approval.
Companies that fail to meet the Board’s objectives within the required timeframe will not be delisted if they publicly explain their reasons for not achieving the objectives.
Nasdaq started the world’s first electronic stock market in 1971. More than 4,000 companies are currently listed on the stock exchange. It was a destination for many tech companies, including Apple, which went public in 1980. Some other tech companies it has drawn in include Microsoft, Cisco, Amazon, and Google, which are now part of Alphabet.
Nasdaq named Adena Friedman as CEO in 2016, the first woman to lead a major U.S. stock exchange.