March 30, 2023

Nasdaq Board Diversity Matrix: Compliance Considerations for Year 2

Nasdaq’s board diversity listing standards required companies to include the Board Diversity Matrix in their proxy statement or on their website for the first time in 2022. This Wilson Sonsini blog provides some tips to companies with respect to the requirements applicable to the second year of these disclosures. Here’s an excerpt:

Under Nasdaq Rule 5606(a), after the first year of disclosure, “all companies must disclose the current year and immediately prior year diversity statistics using the Board Diversity Matrix.”

Nasdaq later published FAQ 1753 clarifying that “if the immediately prior year data is publicly disclosed elsewhere (i.e., a proxy statement, information statement or company website), then the company can choose to disclose the current year data only.” Accordingly, so long as the prior year statistics are still publicly available, a company can continue disclosing only the current year statistics in its Board Diversity Matrix.

However, it’s important to note that if a company complied with Rule 5606 by posting its Board Diversity Matrix on its website (instead of in a proxy statement or information statement), it must maintain the prior year statistics on its website, or otherwise publish it alongside the current year statistics in its next proxy statement.

The blog says that before deciding how to proceed, companies should assess whether there are any advantages to disclosing two years of board diversity statistics, either because they can demonstrate year-over-year improvement or because their investors may want to see the two years of diversity statistics in the same location.

John Jenkins