The Securities and Exchange Commission postponed a decision on
plan to press for greater diversity on corporate boards.
In a notice posted on its website Wednesday, the SEC said it would take additional time to rule on the Nasdaq proposal, while also seeking further public comment. The decision means that a final decision on whether to approve or reject the proposal will likely come out this summer. Nasdaq’s plan needs SEC approval to take effect.
Under Nasdaq’s proposal, companies listed on its exchange would be required to meet certain minimum diversity targets or explain in writing why they aren’t doing so. For most U.S. companies, the target would be to have at least one woman on their boards, in addition to a director who is a racial minority or one who self-identifies as lesbian, gay, bisexual, transgender or queer. Companies would also be required to disclose diversity metrics regarding their boards.
The notice sheds little light on the SEC’s thinking about the proposal, which has become a source of contention between advocates of greater corporate diversity and those who accuse Nasdaq of seeking to implement a quota system.
The SEC will often “institute proceedings” when stock exchanges file especially complex proposals to change their rulebooks. By choosing to go through that process, the SEC extended its deadline for making a decision on the Nasdaq proposal by 90 days. The regulator can then push back its deadline by an additional 60 days, meaning the final decision might not come until August.
The decision will likely come under President Biden’s pick to lead the SEC,
assuming he is confirmed by the Senate. On Wednesday, Mr. Gensler cleared a key hurdle toward becoming SEC chairman when the Senate Banking Committee approved his appointment.
“We welcome the SEC taking additional time to review Nasdaq’s board diversity disclosure proposal, and we appreciate the opportunity to respond to further comments regarding the proposal,” a Nasdaq spokesman said in a statement. The SEC declined to comment.
Last month, Nasdaq unveiled a number of minor amendments to its proposals in response to feedback on its original plan. Among the changes, Nasdaq relaxed the requirements for companies with small boards of five or fewer directors by allowing them to meet its targets with just one diverse director instead of two. Nasdaq would also give companies a one-year grace period if they fall short of the diversity target as a result of a board vacancy when, for instance, one of their diverse directors resigns or departs because of illness.
Write to Alexander Osipovich at [email protected]
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