Nasdaq Says Companies Must Have At Least 1 Woman And 1 “Diverse” Director
Nasdaq wants to force the 3,249 companies listed on its main U.S. stock exchange to have at least one woman and one “diverse” director or face consequences (Nasdaq found 75% of its companies did not meet these diversity requirements).
The "diverse" director must self-identify as an underrepresented minority or L.G.B.T.Q. If new requirements are accepted then companies will need to publicly disclose their board diversity data within a year. Each company will need to have at least one woman or diverse director within two years. (Bigger companies expected to hire 1 of each type of director within 4 years). Companies that don’t comply could face potential delisting. (Those that report data but don’t comply will have to publicly explain why).
“The ideal outcome would be for the S.E.C. to take a role here,” Adena Friedman, Nasdaq’s C.E.O., said. “They could actually apply it to public and private companies because they oversee the private equity industry as well.”
Goldman Sachs announced that it would require companies it helps take public to have at least one diverse board member.
A new California law imposes a minimum number of minority directors on companies headquartered in the state.
“Diversity of the board is an important element of giving investors confidence in the future sustainability of the company,” Ms. Friedman said. “It’s not like we’re saying this is an optimal composition of a board, but it’s a minimum level of diversity that we think every board should have.”
Since Nasdaq has already put forth the paperwork to the S.E.C., now the S.E.C. will solicit public comments. Next the commission will decide how to proceed.