SR-NASDAQ-2020-081

 

OMG!

"Nasdaq conducted an internal study of the current state of board diversity among Nasdaq-listed companies based on public disclosures, and found that while some companies already have made laudable progress in diversifying their boardrooms, the national market system and the public interest would best be served by an additional regulatory impetus for companies to embrace meaningful and multi-dimensional diversification of their boards. It also found that current reporting of board diversity data was not provided in a consistent manner or on a sufficiently widespread basis. As such, investors are not able to readily compare board diversity statistics across companies. Accordingly, Nasdaq is proposing to require each of its listed companies, subject to certain exceptions, to: (i) provide statistical information regarding diversity among the members of the company’s board of directors under proposed Rule 5606; and (ii) have, or explain why it does not have, at least two “Diverse” directors on its board under proposed rule 5605(f)(2). “Diverse” means a director who self-identifies as: (i) Female, (ii) an Underrepresented Minority, or (iii) LGBTQ+. Each listed company must have, or explain why it does not have, at least one Female director and at least one director who is either an Underrepresented Minority or LGBTQ+. Foreign Issuers (including Foreign Private Issuers) and Smaller Reporting 8 See Vanguard, Investment Stewardship 2019 Annual Report (2019), available at: https://about.vanguard.com/investment-stewardship/perspectives-andcommentary/2019_investment_stewardship_annual_report.pdf (“We want companies to disclose the diversity makeup of their boards on dimensions such as gender, age, race, ethnicity, and national origin, at least on an aggregate basis.”); see also State Street Global Advisors, Diversity Strategy, Goals & Disclosure: Our Expectations for Public Companies (Aug. 27, 2020) https://www.ssga.com/us/en/individual/etfs/insights/diversity-strategy-goals-disclosure-ourexpectations-for-public-companies (announcing expectation that State Street’s portfolio companies (including US companies “and, to the greatest extent possible, non-US companies”) provide board level “[d]iversity characteristics, including racial and ethnic makeup, of the board of directors”). SR-NASDAQ-2020-081 Page 7 of 271 Companies, by contrast, have more flexibility and may satisfy the requirement by having two Female directors. “Female” means an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth. “Underrepresented Minority” means, consistent with the categories reported to the Equal Employment Opportunity Commission (“EEOC”) through the Employer Information Report EEO-1 Form (“EEO-1 Report”), an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities. “LGBTQ+” means an individual who self-identifies as any of the following: lesbian, gay, bisexual, transgender or a member of the queer community."