THE NEUTRAL ZONE
The Nasdaq stock exchange wants to push for more diversity in the boardrooms of listed companies.
If approved by the U.S. Securities and Exchange Commission, the new listing rules would require all companies listed on its U.S. exchange to disclose diversity statistics for their board of directors. Companies would have to have at least one board member who identifies as female and one who identifies as an underrepresented minority or LGBTQ+. Foreign and smaller companies could satisfy the requirements with two female board members. All companies must meet the new requirements within two years of the rule’s approval.
During the past six months, Nasdaq found that more than 75% of its listed companies did not meet the proposed diversity requirements. Timeframes for companies to meet even more diversity on their boards will be based on their listing tiers.
“We are 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,” Nasdaq President and CEO Adena Friedman said.
Women held 22% of Fortune 500 seats in 2018, compared to 20% a year earlier and 16% in 2010, according to the 2018 Board Diversity Census from the Alliance for Board Diversity and the consulting firm Deloitte. White men held 66% of Fortune 500 board seats in 2018. Black individuals held nearly 9% of seats in 2018, compared with nearly 8% in 2010.
Nasdaq Proposes Board-Diversity Rule for Listed Companies – Wall Street Journal – 12/1/2020
Nasdaq has determined that over the past six months, more than three-quarters of its listed companies would have fallen short of the proposed requirements. Foreign companies and smaller companies could meet the requirement with two female directors, Nasdaq said.
Companies whose boards are entirely white men could be delisted from Nasdaq’s US stock exchange under new proposals – Business Insider – 12/1/2020
In July, Goldman Sachs stopped doing initial public offerings for companies without at least one diverse board member, with a focus on women. “We might miss some business,” Goldman Sachs CEO David Solomon told CNBC in January after announcing the change. “But in the long run, this I think is the best advice for companies that want to drive premium returns for their shareholders.”
Nasdaq to Corporate America: Make your boards more diverse or get out – CNN – 12/1/2020
Companies also would be required to disclose “consistent, transparent diversity statistics” about their boards. Assuming they are approved, the rules would require at least one diverse director within two years and two within four to five years, depending on the size of the company. A company could have its shares delisted from the exchange if it does not comply.
Nasdaq companies with all-white, male boards could be delisted under diversity proposal – New York Daily News – 12/1/2020
The proposed rule would force boards to have at least one member who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ. Nasdaq would also require its more than 3,300 companies to publicly disclose consistent and transparent diversity statistics about their board of directors within one year of the SEC’s potential approval of the rule.