The New York Stock Exchange considers board diversity a critical issue. In 2019 the NYSE Board Advisory Council launched an initiative to identify board-ready candidates from underrepresented groups. Companies were driven by this initiative to uphold their pledges to diversity and inclusion. Investors and customers are the driving forces behind initiatives and acts such as this one, therefore it is important for companies to adhere to requirements that have been put in place.
However, the New York Stock Exchange is not always at the forefront of diversity and inclusion in executive boardrooms.
In 2022 Nasdaq put forward a new Board Diversity Rule. It was finalized and submitted in August and is as follows: companies listed on the U.S. exchange will have one year from submission to either, meet the two-member minimum of gender or ethnic diversity, or submit an explanation as to why they cannot. The conclusion on this requirement by Nasdaq is that it is a proper first step, but nowhere near where they should or need to be.
The New York Stock Exchange had not yet caught up with the SEC’s approval of the Nasdaq diversity initiative in August 2021. On December 9th, 2020, NYSE President Stacy Cunningham discussed diversity and other topics during an interview on Bloomberg TV. In the past year, there has not been much progress made by The New York Stock Exchange toward new and improved diversity initiatives. It is important at this moment to continue to work towards Diversity and Inclusion (D&I), and not let ourselves be lulled into a false sense of ongoing progress.
The New York Stock Exchange, instead of requiring diversity like Nasdaq, uses its Board Advisory Council to ensure progress in diversity and inclusion. The council is made up of 19 members, each of whom are accomplished and knowledgeable CEO’s and executives. They use their personal connections in order to identify and vet proper candidates for NYSE-listed companies to choose from. This method is supported by a publication by Vell Executive Search, Inc. on gender diversity within boards of technology companies, in which researchers found that 92% of those board seats are filled through personal networks. Most executive positions are found through personal connections anyways, however, it was found that in general women have much less access to these networks, so intentionally expanding these networks to include diverse candidates has made significant progress.
Overall, regardless of differences in method, both stock exchanges agree that diversity improves board performance and listed companies are looking to improve the diversity of their boards. Ultimately, for women and members of underrepresented minority groups, now more than ever, is the best time to search for board positions.