Nasdaq Board Diversity Proposal Attracts Support and Suggested Tweaks

Fenwick corporate governance practice co-chair David Bell talked to IR Magazine about Nasdaq’s proposal for adopting rules to promote diversity on company boards that, according to the article, has received support from a variety of parties.

Nasdaq filed the proposal with the SEC in December 2020 to adopt new listing rules that would require companies to have (or provide explanation as to why they do not have) at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an under-represented minority or LGBTQ+.

In his comments with IR Magazine, Bell noted that the statistical data sought might create privacy concerns for some directors and offered a suggestion to avoid this.

He noted, “The proposed format for the board diversity matrix requires companies to provide information on each director’s voluntary, self-identified gender and racial/ethnic characteristics and LGBTQ+ status. But because the gender information is also required for each racial/ethnic category, there is the potential for an individual director’s characteristics to be unintentionally identified through the board diversity matrix, losing the anonymity afforded by aggregating such information.”

Further, Bell suggested this potential issue could be avoided by modifying the board diversity matrix.

He stated, “Instead of providing columns for each racial/ethnic category to disclose the number of directors based on gender identification, just the total number (regardless of gender category) can be included for each racial/ethnic category in the same way that LGBTQ+ is currently presented in the board diversity matrix. Gender categories could then be presented separately showing the total number of men, women, non-binary and undisclosed, each in its own row.”

The full article is available in IR Magazine.