Nasdaq Takes Aim At All-White, Male Company Boards With Diversity Proposal

Dec 1, 2020
Originally published on December 2, 2020 1:04 pm

Nasdaq wants to require the more than 3,000 companies listed on its stock exchange to improve boardroom diversity by appointing at least one woman and at least one minority or LGBTQ+ person to their boards.

Companies would have to report regularly on how many women and minorities sit on their boards and then follow that up by appointing at least one member of each group, under a rule submitted Tuesday to the Securities and Exchange Commission.

"We believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America," said Adena Friedman, president and CEO of NASDAQ, in the statement from the exchange.

Women and minorities are still badly underrepresented in the citadels of corporate power, and three-quarters of listed companies would not currently meet the new diversity standards, according to Nasdaq.

But that is slowly changing.

California Gov. Gavin Newsom recently signed a bill requiring companies headquartered in the state to have at least one minority on their boards, while Goldman Sachs has said it won't take a company public unless at least one minority group member sits on its board.

Boardroom diversity requirements have been standard in some European countries for years. Norway introduced gender quotas in 2003, while Iceland, Spain and France require that women fill 40% of supervisory board seats.

Germany is the largest economy to impose quotas, requiring at least 30% of board seats to be filled by women.

"Corporate diversity, at all levels, opens up a clear path to innovation and growth. We are inspired by the support from our issuers and the financial community with this effort and look forward to working together with companies of all sizes to create stronger and more inclusive boards," said Nelson Griggs, president of the Nasdaq exchange.

Copyright 2021 NPR. To see more, visit


Nasdaq is taking aim at corporate boards that are made up solely of white men. In what could be a game-changing proposal, companies that list on the stock exchange may be required to have at least one woman and one member of a minority group on their boards. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: Companies often give lip service to the importance of diversity in the boardroom, but Nasdaq officials say as many as three-quarters of the more than 3,200 companies listed on the exchange have no one but white men on their boards of directors. The new rules are intended to pry open the boardroom doors for everyone else. Jeff Thomas is a Nasdaq senior vice president.

JEFF THOMAS: This is really just a first step to provide better disclosure around diversity for companies and really start a conversation to help advance diversity in the boardroom.

ZARROLI: If the rule is approved by the Securities and Exchange Commission, companies will have to report the racial and gender makeup of their boards. Those that don't already have them will have to appoint one woman and one member of an underrepresented minority group, which includes African Americans, Latinos, Asian Americans and LGBTQ people. If they don't, they can be kicked off Nasdaq. Stephanie Creary, an assistant professor of management at the Wharton business school, says the new rules could put real teeth in corporate diversity campaigns.

STEPHANIE CREARY: Requiring companies that are listed with Nasdaq - that's a lot of companies - to follow this rule is hugely powerful and a really - a strong leap in the right direction of accountability on this issue.

ZARROLI: The U.S. has been slower than other countries to impose diversity quotas. Germany, Spain and France require 30- to 40% of corporate board seats to be filled by women. Racial quotas are a lot less common. But Creary says many companies are voicing a commitment to racial diversity after the murder of George Floyd in Minneapolis, which led to weeks of protests all over the country.

CREARY: We do know that, given the events of the summer - that more boards are actually looking for Black and brown board directors.

ZARROLI: One survey of executive search firms found that, since last summer, there's been a spike in the number of companies trying to recruit racial minorities to their boards. Whether that leads to real change is unclear, but the new rules announced by Nasdaq will ensure that companies at least have to think about diversifying their ranks or at least explain why they can't do so.

Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.