Companies listed on Nasdaq’s stock exchange will have to comply with new diversity mandates for their top leadership.
In December, Nasdaq filed a proposal with the Securities and Exchange Commission to create new listing rules that would “require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors.”
Companies must have — or “explain 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 underrepresented minority or “LGBTQ+.” Foreign companies and smaller firms would have “additional flexibility in satisfying this requirement” by including two female directors.
On Friday afternoon, the SEC affirmed Nasdaq’s new regulations.
“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders,” wrote SEC Chairman Gary Gensler in a statement. “These rules reflect calls from investors for greater transparency about the people who lead public companies, and a broad cross-section of commenters supported the proposed board diversity disclosure rule.”
Sen. Pat Toomey (R-PA) — the Ranking Member of the Senate Banking, Housing and Urban Affairs Committee — was by no means pleased with the new rules.
“Corporate board rooms, like all organizations, can benefit from a diversity of perspectives, but NASDAQ’s one-size-fits-all quota misses the mark,” he said in a statement emailed to CNBC. “By defining diversity by race, gender, and sexual orientation, NASDAQ’s mandate will inevitably pressure companies to subordinate crucial factors such as knowledge, experience, and expertise when selecting board members.”
“I’m disappointed Chairman Gensler is turning a financial regulator into a laboratory for progressive social engineering,” he continued.
Many entrepreneurs are likewise worried about American corporations’ drift into “wokeness.”
Vivek Ramaswamy — the former CEO of biopharmaceutical company Roivant Sciences — explained that he resigned from his post in January due to frustration over the leftward trend of the American business ecosystem.
“I’m fed up with corporate America’s game of pretending to care about justice in order to make money,” he wrote in a recent op-ed for the New York Post. “It’s not just ruining companies. It’s polarizing our politics. It’s dividing our country to a breaking point. Worst of all, it’s concentrating the power to determine American values in the hands of a small group of capitalists, rather than in the hands of the American citizenry at large, which is where the dialogue about social values belongs.”
“Corporations win. Woke activists win. Celebrities win. Even the Chinese Communist Party finds a way to win. But the losers of this game are the American people.”