Risk Management

Nasdaq proposal would require board diversity

Judy Greenwald

December 01, 2020 Reprints

Employment Practices Regulation P/C Insurers More + Less -

Nasdaq filed a proposal with the U.S. Securities and Exchange Commission on Tuesday which, if approved, would require most Nasdaq-listed companies to have – or explain why they do not have – at least two diverse board members, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+, the exchange said Tuesday.

The new listing rules would also require all companies listed on Nasdaq’s U.S. exchange to publicly disclose “consistent, transparent” diversity statistics regarding their board of directors, Nasdaq said in its statement.

Nasdaq said the 271-page filing’s goal “is to provide stakeholders with a better understanding of the company’s current board composition and enhance investor confidence that all listed companies are considering diversity in the context of selecting directors.”

The statement said as part of its rationale for the new requirements, the Nasdaq proposal presents an analysis of more than two dozen studies that found an association between diverse boards and better financial performance and corporate governance.

Under the proposal, Nasdaq-listed companies would be required to publicly disclose board-level diversity statistics through its proposed disclosure framework within one year of the SEC’s approval of the listing rule, the statement said.

U.S. insurers are taking a closer look at the recruiting and succession practices of corporate customers, worried about mounting lawsuits over a lack of diversity among top executives and directors, industry sources have said.