Nasdaq is pushing for the more than 3,000 companies listed on its
The company filed a proposal Tuesday with the
The proposal would also require most Nasdaq-listed companies to have at least two diverse directors or, if they cannot meet the mandate, to explain why not. That could include one board member who is female and one who is either an underrepresented racial minority or LGBTQ. Foreign companies and smaller companies would have additional flexibility in satisfying this requirement with two female directors.
Nasdaq's plan ups the stakes in what was already a widening push by shareholders and governments around the world for more diversity on corporate boards, which often are composed of mostly white men.
It's not just a sense of fairness. Proponents say greater board diversity can improve financial performance for companies — and ultimately their stock prices — by bringing in varying opinions and voices and fostering a better understanding of employee and customer bases.
In its proposal, Nasdaq cited a report from
Companies have heard the criticism and made some moves toward increased diversity, but progress has been slow.
Women hold just 23.1% of board seats at companies in the Russell 3000, a broad index that includes most of the
Progress in improving racial diversity on boards has been slower. One difficulty is that tracking racial and ethnic diversity has been tougher than measuring gender diversity, with companies often not disclosing such data, something that Nasdaq hopes its proposal can help ameliorate.
“Corporate diversity, at all levels, opens up a clear path to innovation and growth,"
The
”We welcome dialogue on how to improve diversity, inclusion and opportunity in the financial services sector and our economy more broadly,”
Shareholders are increasingly pushing companies to improve their board diversity, both in public and in private. Big investors are trying to cajole executives through private channels. For example,
In public, investors are getting more chances to vote at companies' annual meetings on shareholder resolutions seeking more disclosures on the makeup of the board.
Governments are also requiring improved disclosures or mandating better representation.
Such efforts have met some resistance, though.
In
“I never expected a push for diversity to cause one of the most hotly debated bills on the floor of the year,” said Welch, a Democrat. But that’s what he said happened.
Early opposition came from manufacturers, who worried they may need to kick someone off the board who was not a woman or an
The final bill, signed into law last year, no longer had the diversity mandate. Instead, it required only that companies report each year on their boards’ racial and gender breakdowns. Denzler's group was neutral on the final bill.
At the
“This proposal will help accelerate the developments that are already underway and is a positive and balanced way to get to the end result of allowing boards to be more representative of a business’s consumer and employee base,” he said in a statement.
The Nasdaq's
Nasdaq began in 1971 with the world's first electronic stock market and is home to many of the tech world's most iconic companies, including
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