Proposed Legislation Would Mandate Board and C-Suite Diversity Disclosure
The “Improving Corporate Governance Through Diversity Act of 2019” was recently introduced by Democrats in the U.S. Senate and House of Representatives, with co-sponsors including 2020 presidential candidates Cory Booker and Kamala Harris. The proposed legislation would require any proxy statement relating to the election of directors to include disclosure of certain self-identified diversity characteristics of the company’s directors, director nominees and executive officers. While an earlier version of the bill failed to gain traction in 2017, its fate may be more promising this time around given Democratic control of the House and support from the Council of Institutional Investors and the U.S. Chamber of Commerce.
Specifically, the proposed legislation would require disclosure of (A) data, based on voluntary self-identification, on the racial, ethnic and gender composition of the company’s board of directors, nominees for the board of directors and executive officers; (B) the status, based on voluntary self-identification, of any of the company’s directors, director nominees or executive officers as a veteran; and (C) whether the company’s board of directors, or any board committee, has adopted any policy, plan or strategy to promote racial, ethnic and gender diversity among the company’s board of directors, nominees for the board of directors or executive officers. Much like the new SEC guidance on board diversity disclosure discussed elsewhere in this edition of The Ticker, the proposed legislation does not address situations where certain individuals do not wish to disclose their diversity characteristics.