Nasdaq rule adds to pressure on banks to diversify boards
Polo Rocha, Laura Alix
The American Banker article, "Nasdaq rule adds to pressure on banks to diversify boards," quoted Russell Reynolds Associates Consultant Mary-Caroline Tillman on how the new Nasdaq rule impacts banks. The article is excerpted below.
A new diversity rule for companies listed on the Nasdaq stock exchange represents the latest push to convince banks to add more women and minorities to their boards of directors.
While the standards are facing some pushback, their recent approval by the Securities and Exchange Commission puts pressure on Nasdaq-listed banks to rethink long-standing approaches to recruiting board members, if they have not already done so amid insistence from investors and state officials.
“The big challenge is that banks require a lot of preparation for the board meetings. It’s quite a heavy lift,” said Mary Caroline Tillman, who co-leads the global financial services sector at the executive search firm Russell Reynolds. “There’s also a lot of risk involved with these banks. If you go onto the board and something goes wrong, there’s a huge reputational risk.”
Still, Tillman supports the Nasdaq’s rule. She said that a diversity of thought and experience on a board can help discourage groupthink when it is added in a thoughtful and deliberate way. She also argued that more disclosure about diversity is generally good for investors, many of whom have sought this information in recent years.
Banks cannot reasonably expect to find the board candidates they want within a matter of months, according to Tillman. But they can start expanding their networks and looking at executives who could be ready to serve on a board a few years into the future.
“It’s no different than doing succession planning for your executive suite,” Tillman said. “Frankly, it surfaces a lot of really talented individuals who might not have even been thought about if you hadn’t opened the aperture."
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