The rule, which needs SEC approval to take effect, requires companies to have at least two companies Diverse managers, Including one Women And one member of a “underrepresented” minority group, including blacks, Hispanics, or members of the LGBTQ + community. Small companies and foreign companies on the exchange can comply with two directors.
Companies will also be required to disclose “consistent and transparent statistics on diversity” on their boards of directors. Assuming approved, the rules will require at least one miscellaneous manager in two years and two in four to five years, depending on the size of the company. A company’s shares can be de-listed from the stock exchange if it does not comply.
“The purpose of Nasdaq is to support inclusive growth and prosperity to support stronger economies,” said Adina Friedman, CEO of Nasdaq. The Nasdaq proposal provides an analysis of more than two dozen studies that have found correlations between diverse boards and better financial performance and corporate governance.
The exchange joins a growing group of voices pushing for greater board diversity. In September, California Gov. Gavin Newsom signed a law requiring it At least one minority member on the boards For all publicly traded companies headquartered in California. And in January, Goldman Sachs(P) She announced that she will Don’t take a public company Unless he has at least one diversified board member.
Many large public corporations already comply with the minimum requirements of the Nasdaq rule. In fact, four of the five largest companies on the exchange by market capitalization – an Apple(AAPL)And the Microsoft(MSFT), Google owner the alphabet(Google) And the The social networking site Facebook(FB) – They have panels in which straight white men are a minority.
Two other companies are in the top ten – Comcast(CMCSA) And the Adobe(ADBE) That women or minorities form half of their councils. And the third largest company, Amazon(AMZN), Has five women, two of them from a minority group, on its 11-member board.
A Nasdaq spokesperson said he believes that at least 85% of its 3,249 listed companies already meet al-Qaeda’s first standards, with one woman or a minority underrepresented on their boards of directors.
But boards are still bastions of white male power in US corporations. Study in September before ISS ESG, The responsible investment arm of institutional shareholder services, found that only 16.8% of 33,000 board members in large-cap companies belong to a minority group, and only 27.4% of directors are women. And 55 of the 496 large-cap companies measured by the ISS ESG, or 11%, do not have diversified directors.
But there are critics to press for minimal diversity in councils. Conservative group Godesal Watch filed a lawsuit in September seeking to block a California law requiring at least one minority director in publicly traded companies located there.
“The California government has a penchant for grossly unconstitutional quotas,” said Tom Vitton, president of Judicial Watch. “Gender quotas and now new quotas for many other groups of company boards are slaps in the face of America’s core value of equal protection under the law.”
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