Nasdaq Inc. is pushing to require the thousands of companies listed on its stock exchange to include people of color, white women and LGBTQ people on their boards.
The exchange operator, formally named National Association of Securities Dealers Automated Quotations, has filed a proposal with the Securities and Exchange Commission that would require listed companies to have at least one woman on their boards, in addition to a director who is a person of color or one who as lesbian, gay, bisexual, transgender or queer. Companies that don’t meet the standard would be required to justify their decision to remain listed on Nasdaq.
Banks, asset managers and lawmakers in California have taken various steps to diversify the predominantly white and male boardrooms of American corporations. Nasdaq’s move could have greater impact because of its ability to set rules for the nearly 3,000 corporations listed on its exchange.
In a review carried out over the past six months, Nasdaq found that more than three-quarters of its listed companies would have fallen short of the proposed requirements. Around 80% or 90% of companies had at least one female director, but only about a quarter had a second one who would meet the diversity requirements.
Nasdaq defined underrepresented minorities as individuals who are Black, Hispanic, Asian, Native American or belonging to two or more races or ethnicities.
The review found smaller companies tended to have less diverse boards and would need to do more to respond to the proposed rule, said Nelson Griggs, an executive vice president at Nasdaq. “With smaller issuers, there will be greater impact,” he said in an interview.
Most of the biggest companies listed on Nasdaq appear to already comply with the new criteria. Among those that don’t are Chinese internet companies Pinduoduo Inc., JD.com Inc. and Baidu Inc., which have no women on their boards. Others with all-male boards include solar company Array Technologies Inc., biotechnology company Allakos Inc. and National Beverage Corp. , maker of LaCroix sparkling water.
