WASHINGTON – A group of Senate Republicans condemned Nasdaq pressure for greater diversity on corporate boards, saying it interfered with board members’ duty to govern in the best interests of shareholders and could hurt financial performance.
In a letter on Friday, all 12 Republicans on the Senate Banking Committee asked the Securities and Exchange Commission to reject Nasdaq’s proposal to require thousands of companies listed on its stock exchange to include women, racial minorities and LGBT individuals in your advices.
“We commend individual companies for the proactive efforts they have already made in recruiting, promoting and retaining diverse talent,” wrote the senators, led by Pat Toomey of Pennsylvania. “However, it is not Nasdaq’s role … to act as an arbiter of social policy or to force a single solution for all cases in 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 who identifies himself as lesbian, gay, bisexual, transsexual or queer. Companies that do not meet the standard would be required to justify their decision to remain listed on Nasdaq.
Nasdaq, in a statement on Friday, said its proposal “is a market-led solution that should simplify and standardize disclosure requirements to avoid the kind of regulatory overshoots that critics fear”.