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Is Nasdaq’s board diversity proposal already working?

May 25, 2021, 9:00 AM UTC

Good morning,

Following the murder of George Floyd in Minneapolis on May 25, 2020, many U.S. companies began reevaluating their diversity, equity, and inclusion practices at the urging of employees, consumers, and investors. The diversity of board members, or lack thereof, is also at the forefront of conversation. 

Nasdaq proposed a board diversity rule in December, which is being considered by the U.S. Securities and Exchange Commission (SEC). (In March, the SEC announced an extension to its review process, including soliciting comments on the proposed rule changes.)

At Workday and Fortune’s recent virtual CFO Collaborative event, Nasdaq CEO Adena Friedman talked about the proposal and its implications.

The primary portion of the proposal provides transparency around the composition of the board from a diversity perspective, and is based on how a board member would self-identify to management, says Friedman. The management team would then populate the data into an anonymized table, she says. 

“The second portion of the proposal is goals that we’ve set for the companies listed on Nasdaq to try to reach within the next four years—to have at least one woman and one underrepresented minority or LGBTQ member on the board,” says Friedman. The only obligation, if a company is not able to meet this diversity requirement, is to explain why not, she says.

The Wall Street Journal reported in December that among Nasdaq-listed companies “around 80% or 90% of companies had at least one female director, but only about a quarter had a second one who would meet the diversity requirements,” adding that it was difficult to find a firm number because of inconsistencies in the way companies report data.

Among other universes of companies there do appear to be signs of improvement. There have been 65 female board appointees and 47 minority appointments among S&P 500 companies since Nasdaq’s announcement in December, says Mark Rogers, CEO of BoardProspects, a digital platform that helps companies find board candidates. The data is based on the company’s research. Rogers says that BoardProspects has seen a “dramatic increase” in the number of corporations reaching out for help finding qualified prospects.

Meanwhile, Russell 3000 companies are also seeing some improvement. Black male board directors gained 170 seats in 2020 compared to 58 seats in 2019, according to BoardProspects’ March report. Black women gained 138 seats in 2020 compared to 56 seats in 2019. But there’s still room for more progress. Of the approximately 27,000 board members within the Russell 3000, just 5.4% are Black individuals, the report found.

Floyd’s murder has resulted in Corporate America realizing it must improve in efforts to diversify the workforce, says Rogers. “But that can only effectively happen if they take a top-down approach by diversifying their own boardrooms,” he says.

However, there’s been some pushback on Nasdaq’s proposed rule, which some have called an overreach. Friedman, however, argues that, “It’s not a hard mandate. It’s a market-led solution that’s really focused on transparency.”

“If you look at the record, 85% of all the comments that have come in have been positive,” she says. “Almost every positive letter has been from an investment community or the corporate community, as well as advocacy groups.”

See you tomorrow.

Sheryl Estrada

Big deal

Following the Colonial Pipeline cyber attack, the ISACA, a global IT association and learning community, polled more than 1,200 of its members in the U.S. to get their perspective on ransomware attacks. The majority of respondents said they will become more prevalent in the second half of 2021.


Going deeper

A new study by The Wharton School of the University of Pennsylvania, with support from Moody’s Corporation and DiversityInc, examines how U.S. companies are defining five key concepts—diversity, inclusion, belonging, equity and respect—as well as implementing and measuring these practices. A finding of the report is motivating middle managers to use evidence-based practices to create workplace cultures is of high importance as they are “central to employees’ experiences at work,” according to the report. Findings also reveal a range of demographic differences across the study’s key concepts, such as, in many cases, Black employees feel that they have greater access to DEI practices than all other racial groups, and people of color and women strongly agree that they engage in speaking out against bias at work or encourage promoting DEI in hiring processes and practices.


Michael (Mick) Lucareli was promoted to EVP and CFO at Modine Manufacturing Company, a thermal management technology company. Lucareli has served as VP of finance and CFO since July 2010. He has been with Modine for 22 years. 

Fred Pensotti was named CFO at Landstar System, Inc., an asset-light provider of integrated transportation management solutions, effective May 24. Pensotti most recently served as CFO at One Call, a healthcare-related services company.



“The situation goes beyond a crisis of employer-employee relations. It really actually has a steep financial cost.”

—Alex Alonso, the Society for Human Resource Management’s chief knowledge officer, on the financial cost for U.S. businesses when employees are mistreated, as told to MarketWatch.

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