Jan. 04, 2021
Chairman Jay Clayton Securities and Exchange Commission Washington, D.C. 20549 USA Sent by email: rule-comments@sec.gov; chairmanoffice@sec.gov Re: NASDAQ Listing Requirements on Board Diversity (SR-NASDAQ-2020-081) January 4, 2021 Dear Chairman Clayton: WomenExecs on Boards (WEoB) is pleased to provide comments to the United States Securities and Exchange Commission (U.S. SEC) regarding SR-NASDAQ-2020-081 relating to listing requirements around board diversity. Please see below for more background on our organisation and its mission. WomenExecs on Boards strongly supports NASDAQ’s proposed listing requirements for board diversity for NASDAQ-listed firms which was filed on 1 December 2020, and encourages the US SEC to approve this proposal. Our members regard diversity as a strategic issue that is fundamental to board quality and strong governance. Board diversity leads to the creation of more sustainable corporate value, a conclusion which is supported by significant empirical research over several decades. We support the International Corporate Governance Network (ICGN)’s Global Governance Principles, especially its Principle 3 which emphasizes that there should be a sufficient mix of directors with relevant knowledge, independence, competence, industry experience and diversity of perspectives to generate effective challenge, discussion and objective decision-making. Here we mean diversity in a broader context, including not only gender, but also other nationality, race, ethnicity and sexual orientation, among other possible considerations. We would also encourage companies to go beyond simply reporting on board diversity by disclosing a skills matrix for the board, aligned with the company’s long-term strategic needs and succession planning, and a policy on board refreshment, which is a critical enabler of board diversity. Directors should be subject to regular re-election based on satisfactory evaluation of their contribution to the board. A report from the nomination committee explaining how it considered the representation of women and/or other minorities in director selection and board evaluation is also useful. We applaud NASDAQ for demonstrating leadership with this initiative, particularly given the important role that stock exchange listing rules play in shaping corporate governance in the US—and the absence of a mandatory and regulatory based national Code of Corporate Governance. This initiative will be welcomed by investors and may serve to increase interest in NASDAQ as an investment platform. Particularly useful are NASDAQ’s suggestions relating to disclosing board-level diversity statistics and the requirement for companies to explain when they do not have at least two diverse directors. These steps are sensible, in line with emerging best practice globally, and should be readily achievable. Additionally, we believe that these disclosure requirements are free from a real cost or administrative burden to listed companies. The existence of our own network of board ready-women (see below), and other similar organisations, should be a signal that there are sufficient diverse candidates qualified and willing to serve on corporate boards if companies are willing in turn to look beyond their usual candidate pool. Further, companies should not regard these requirements alone as achieving best practice for board diversity. There is considerable scope to go further. For example, requiring the appointment of two directors to increase diversity and reduce group think on a board is a fairly modest expectation, albeit a good place to start. As background, WEoB is the alumnae network for the Harvard Business School Executive Education Program “Women on Boards: Succeeding as a Corporate Director” (HBS WOB) which first took place in 2016 with 65 participants, all highly experienced senior female executives from around the world. Since then, 450 board-ready women have taken part in the program. WEoB was established in November 2018. As of October 2020, our 165 members have experience in 30 industries, and come from more than 17 countries, although over 85% are based in North America. 68% of our members are currently on the board of a public or private company (or companies), or on a non-profit board. The mission of WEoB is to position HBS WOB participants to serve on corporate boards through ongoing education, networking and peer support. For more information on WEoB please see: www.womenexecsonboards.com. We hope these comments are useful to your deliberations. Please do not hesitate to contact us if you would like to discuss our support of NASDAQ’s proposal in further detail. Yours sincerely, Rosie Bichard & Patricia Rodriguez Christian Co-Presidents WomenExecs on Boards