Which Nasdaq?... Nasdaq is the publicly traded company which owns and operates the tech-heavy Nasdaq stock exchange. Now, it's looking for SEC approval to implement a board diversity rule for the ~3K companies listed on its exchange. It would be one of the biggest moves ever made to diversify predominantly white and male corporate boardrooms.
- The Proposal: Require companies to have at least one woman on their boards and a director who is a racial minority or who identifies as LGBTQ.
- The Status: 75% of Nasdaq's companies don't meet that proposed requirement. But they might have to in order to stay on the exchange.
- The Future: Nasdaq-listed companies would have to provide diversity stats within a year, and have one “diverse” director within two years (... or explain why they can't).
Deliver the stats... Studies indicate that companies with diverse boards perform better financially and are more innovative. Every S&P 500 company had at least one female director at the end of 2019, but males still controlled 73% of all board seats. Last year, just 59 of the 500 S&P companies disclosed their directors' ethnicity, reporting 78% white board members.
Big corporations can act as de facto lawmakers... and significantly shape society without actual legislation. This year, Goldman said it would no longer ship IPOs of American companies that don't have at least one “diverse” board member. As the gatekeeper to one of the biggest stock exchanges in the world, Nasdaq has even more serious leverage.