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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.
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