WASHINGTON—A group of senate Republicans decried Nasdaq ’s push for greater diversity on corporate boards, saying it interfered with board members’ duty to govern in the best interests of shareholders and could harm financial performance.
In a letter on Friday, all 12 Republicans on the Senate Banking Committee called on the Securities and Exchange Commission to reject Nasdaq’s proposal to require the thousands of companies listed on its stock exchange to include women, racial minorities and LGBT individuals on their boards.
“We commend individual firms for the proactive efforts they have already made in recruiting, promoting, and maintaining diverse talent,” the senators, led by Pennsylvania’s Pat Toomey, wrote. “However, it is not the role of Nasdaq…to act as an arbitrator of social policy or force a prescriptive one-size-fits-all solution upon markets and investors.”
Nasdaq’s proposal, submitted to the SEC in December, would require listed companies 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 that don’t meet the standard would be required to justify their decision to remain listed on Nasdaq.
Nasdaq, in a statement Friday, said its proposal “is a market-led solution that should simplify and standardize disclosure requirements to avoid the type of regulatory overreach the critics fear.”
