Most of Connecticut’s publicly traded banks have at least one female board member, partially satisfying new diversity rules for companies listed on the Nasdaq stock exchange.
The U.S. Securities and Exchange Commission earlier this month approved Nasdaq’s new rule aimed at increasing diversity on corporate boards and improving disclosures about the current composition of a company’s board of directors.
The new rules will require boards of U.S. companies listed on the Nasdaq to have at least two diverse members.
One member must identify as a woman, and another member must identify as either an underrepresented minority or LGBTQ+. An underrepresented minority is someone who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or two or more races or ethnicities.
Companies that do not have two diverse board members will have an alternative. These companies will instead provide an explanation of why they do not have two diverse members. Nasdaq said these explanations could include a description of a different approach the company is taking.
For companies identifying as smaller reporting companies, the diversity requirements would be satisfied by having two female board members instead of one person who identifies as an underrepresented minority or LGBTQ.
Companies must annually disclose data about board diversity, and Nasdaq has created a template companies can use when reporting the information. The information will be included annually in the proxy statement filed with the SEC, or in the annual Form 10-K report, if no proxy is filed.
If a company does not meet the diversity objectives, the explanation would be provided in the company’s proxy statement, information statement for its annual shareholder meeting, or on the company’s website.
Most companies will need to begin providing the data in 2022.
In a statement last December when the rule was proposed, Nasdaq referenced more than two dozen studies that found “an association between diverse boards and better financial performance and corporate governance.”
“Nasdaq’s purpose is to champion inclusive growth and prosperity to power stronger economies,” Adena Friedman, Nasdaq’s president and CEO, said in December. “Our goal with this proposal is to provide a transparent framework for Nasdaq-listed companies to present their board composition and diversity philosophy effectively to all stakeholders; we believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America.”
In a statement on Aug. 6 following the SEC’s approval, Nasdaq said it would help companies implement the new rule.
“We are pleased that the SEC has approved Nasdaq’s proposal to enhance board diversity disclosures and encourage the creation of more diverse boards through a market-led solution,” Nasdaq said. “We look forward to working with our companies to implement this new listing rule and set a new standard for corporate governance.”
Stamford-based Patriot National Bancorp, which trades on the Nasdaq, has a six-member, all-male board, according to its website. A review of the websites for the parent companies of Connecticut’s other publicly traded banks, including Bridgeport-based People’s United Bank, Waterbury-based Webster Bank, Lakeville-based Salisbury Bank and New Canaan-based Bankwell Bank, shows that they have at least one female board member.
