Nasdaq seeks more diversity on boards of companies listed on exchange

Nasdaq is pushing for the more than 3,000 companies listed on its U.S. stock exchange to make their boardrooms less overwhelmingly male and white by hiring directors that better reflect the country’s diverse population.

The company filed a proposal Tuesday with the Securities and Exchange Commission that, if approved, would require all companies on the exchange to disclose the breakdowns of their boards by race, gender and sexual orientation. Companies that do not comply could be delisted, or kicked off the exchange.

The proposal would also require most Nasdaq-listed companies to have at least two diverse directors or, if they cannot meet the mandate, to explain why not. That could include one board member who is female and one who is either an underrepresented racial minority or LGBTQ. Foreign companies and smaller companies would have additional flexibility in satisfying this requirement with two female directors.

California passed a law earlier this year requiring public companies headquartered in the state to diversify their boardrooms. Those rules require more people from diverse backgrounds be added more quickly to boards than what the Nasdaq rule is proposing, according to Jeffrey Thomas, a senior vice president at Nasdaq.

Thomas said the stock exchange worked with organizations including the Silicon Valley Leadership Group, an advocacy group whose membership includes more than 360 major businesses, to craft the proposed changes.

“The California law is really saying ‘We want to see more diverse people on boards,’” Thomas said. “We want to see much more disclosures from companies of who is on their board.”

Thomas said the exchange plans to help...