Nasdaq Looks to Ease Some Board Diversity Demands After Feedback

Nasdaq Inc. is seeking to give more time and flexibility to companies listed on its exchange to comply with its proposal to enhance diversity on their boards.

The stock exchange told the Securities and Exchange Commission that it’s changing its board diversity proposal to let companies with five or fewer board members have only one diverse member. All companies also would get two years to meet diversity obligations if Nasdaq lists them after the proposal is adopted.

Companies that already are listed on the exchange and lose a diverse director would get a year to find an appropriate replacement, according to Nasdaq’s proposed changes.

The initial plan, which needs SEC approval, would require most boards to have at least one female member and one who identifies as an underrepresented minority or LGBTQ in the coming years—or explain why they don’t.

Nasdaq’s original plan calls for companies to have at least one diverse board member within two years of SEC approval. That tally would increase to at least two diverse board directors, including a woman, within four to five years of the agency’s backing, depending on the company.

The proposed alterations came after companies raised concerns about the plan Nasdaq originally issued in December, the stock exchange said in a Feb. 26 letterto the agency.

“We are encouraged by the feedback and support for our board diversity proposal and believe the amendments and clarifications we have submitted to the SEC will help to strengthen it further,” Nasdaq spokesman Will Briganti said in a statement Sunday.

SEC Decision

The SEC could reach by this summer an initial, and potentially binding, decision on whether Nasdaq can implement the plan.

Nasdaq’s latest alterations didn’t go as far as some would have liked, however.

Nasdaq didn’t add people with disabilities to its diversity considerations, as suggested by Disability:IN and the American Association of People with Disabilities. It also didn’t pull its proposal after Republicans on the Senate Banking Committee urged the SEC to reject it.

Almost 85% of the letters the SEC received about the proposal were in support of Nasdaq’s plan, according to the stock exchange. Facebook Inc. and Microsoft Corp. were among the supporters.