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Kleinberg Kaplan Partner Christopher P. Davis Discusses Nasdaq’s Proposed Diversity Rule with The Wall Street Journal, Law360,, Corporate Counsel

Firm News | December 2, 2020 | Investor Activism

Christopher P. Davis, chair of Kleinberg Kaplan’s Investor Activism practice, spoke with The Wall Street Journal on a brand new proposed rule by Nasdaq on board diversity, calling for listed companies to include women and people of diverse racial identities or sexual orientation on their boards – or explain why not.

In the article, “The Morning Risk Report: Board Diversity Could Foster Better Compliance, Nasdaq Says,” Chris shares, “It’s going to be very hard to go to any investor group nowadays and explain that you don’t have a female director.”

He further expanded on the implication of Nasdaq’s proposal with, saying, “I think it represents a rapidly coalescing societal consensus that greater diversity is required and is not happening fast enough absent top-down requirements” and speculated that similar mandates would grow in popularity.

Speaking with Law360, Chris said that this does not come as a surprise and notes, “this is staying ahead of a cultural trend.”

The proposal stipulates that companies that fail to meet diversity requirements risk being delisted from Nasdaq’s exchange, but that the penalty can be avoided by explaining the absence of diverse directors. In a conversation with Corporate Counsel, Chris posited that this “theoretical loophole” could be likened to a company “essentially focusing a spotlight on its failure.”

Nasdaq, the second-largest exchange by market capitalization, filed its proposal with the U.S. Securities and Exchange Commission yesterday, citing studies showing that diverse boards are associated with improved governance and financial performance.

Kleinberg Kaplan’s Investor Activism lawyers develop and help execute innovative strategies to help investors achieve strategic goals, from the initial analysis of available options through the successful conclusion of activist campaigns. The firm has been involved in numerous successful proxy contests during the last three decades for its many activist clients, engaging in the full spectrum of approaches, including private discussions with management and the board of directors, tender offers, Schedule 13D and Section 16 filings and compliance.