ISS, Glass Lewis, and Now Nasdaq – Board Diversity Is Here

On December 1, 2020, the Nasdaq Stock Market LLC (“Nasdaq”) proposed to adopt listing rules related to board diversity after determining that the national market and the public interest would benefit from a regulatory framework designed to promote “meaningful and multi-dimensional diversification of their boards.” This news comes following the influx of recent state laws and proposals relating to board diversity and on the heels of announcements from both Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis that they have updated their voting policies related to board diversity. The proposed rule change had met with significant stakeholder interest, with Nasdaq reporting that as of January 9, 2021, it had received more than 150 comment letters. Nasdaq’s proposed rules represent the second largest stock exchange in the world, recognizing mounting pressure from shareholders, institutional investors, and advisory services to proactively address board diversity as part of a public company’s disclosures. Board diversity is a trend that cannot be ignored, irrespective of the state in which a company is headquartered, and California’s headline-grabbing board diversity legislation can no longer be seen as an outlier event, but rather a harbinger—indicative of a larger movement that has now resulted in new initiatives by Nasdaq, ISS, and Glass Lewis.

Read our client alert.