Diversity No Longer Optional For NASDAQ Listed Companies?

CBx Vibe:Money Trees” Kendrick Lamar

By Erica Johnson

  • Nasdaq seeks to make boardroom diversity mandatory
  • Board appointments for people of color in the U.S. increased from 13% in 2010 to 23% in 2019

Nasdaq is challenging the status quo by requiring its listed companies to make their boardrooms more diverse. The request filed with the Securities and Exchange Commission seeks the authority to mandate that companies have at least two diverse board members. Board appointments for people of color in the U.S. increased from 13% in 2010 to 23% in 2019, so if Nasdaq companies don’t or seemingly can’t diversify their boards, they will be publicly required to explain why not and possibly delisted.

Why This Matters: The aftermath of George Floyd has laid bare the inequities and disenfranchisement that African Americans have faced for centuries. It forced Corporate America to reevaluate its diversity and inclusion practices which meant creating more paths for diverse candidates to achieve a C-Suite role that isn’t related to diversity, equity, and inclusion. It also meant more diversity on boards of fortune 500 companies and beyond.

Unfortunately, 50% of new board members were current or former CEOs

A report by Heidrick & Struggles projects that by 2022, appointments of women to board positions will reach 50% among the incoming class of new board members. While board appointments in the U.S. for people of color have also increased, unfortunately, 50% of new board members were current or former CEOs.

Situational Awareness: Board diversity has a long way to go because the reality is that 50% of new board members are former CEOs, along with 21% being current or former CFOs in 2019, according to a report by Heidrick & Struggles. However, if people of color aren’t reaching the CEO or CFO level, how can they join boards? The system does not set up people of color for success. Nasdaq calling out its listed companies by holding them accountable to make their boards more diverse can change that.

CBx Vibe:Money Trees” Kendrick Lamar

CONTRIBUTOR

Erica Johnson

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