The Atlanta Journal-Constitution
Nasdaq seeks more diversity
Stock exchange wants to require change in its listed companies.
The Nasdaq stock exchange is seeking U. S. authority to require more diversity in the boardrooms of Nasdaq- listed companies, or for those companies to explain why they can not.
It is the first major exchange to pursue such a requirement.
The proposal filed with the U. S. Securities and Exchange Commission on Tuesday, if approved, would require all companies listed on the exchange to publicly discl ose consi st ent , t ransparent diversit y statistics about their board of directors.
I t would require most Nasdaq- listed companies to have, or explain why they don’t have, at least two diverse directors. This includes having one board member who self- identifies as female and one who self- identifies as either an underrepresented minority or LGBTQ. Foreign companies and smaller reporting companies would have additional flexibility.
“We’re 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 and we think this is a step forward,’” said Nasdaq CEO Adena Friedman on CNBC. “But we would welcome the opportunity for the New York Stock Exchange and for the SEC to take an active role here as well.”
Companies that do not meet the diversity requirement will not be delisted from Nasdaq, Friedman said, but they will have to outline the obstructions to doing so.
More than 3,300 companies trade on the exchange. It is dominated by technology companies, with many financial, biotech and industrial companies as well. It is the second- largest exchange by market capitalization, behind the New York Stock Exchange.
Nasdaq said the proposal’s goal is to give stakeholders a better understanding of a company’s current board composition and to bolster investor confidence that all listed companies are considering diversity when they look for new board members. The proposal would require all Nasdaq- listed companies to publicly disclose board- level diversity statistics through Nasdaq’s proposed disclosure framework within one year of the SEC’S approval of the listing rule.
All companies will be expected to have one diverse director within two years of the SEC’S approval of the listing rule. Companies listed on the Nasdaq Global Select Market and Nasdaq Global Market will be expected to have two diverse directors within four years of listing rule approval.
Companies listed on the Nasdaq Capital Market will be expected to have two diverse directors within five years of the SEC’S approval.