The SEC announced last week a new rule requiring corporate disclosure regarding how “diversity” is considered in the director nomination process. Here’s what the Commission’s press release says:
The SEC approved a rule that would require disclosure of whether, and if so how, a nominating committee considers diversity in identifying nominees for director.
If the nominating committee or the board has a policy with regard to the consideration of diversity in identifying director nominees, the final rules require disclosure of how this policy is implemented and how the nominating committee or the board assesses the effectiveness of its policy.
In the Center for Equal Opportunity’s comments to the Commission last summer, we noted, “Usually ‘diversity’ is understood to include racial and ethnic diversity. We strongly oppose any consideration of race or ethnicity in selecting individuals for a position on a corporate board. Such discrimination is wrong. It is also illegal.” After explaining why it’s illegal, we concluded, “Accordingly, we respectfully request that, if the SEC decides to require disclosure related to ‘diversity,’ it makes clear that the Commission is not requiring or encouraging corporations to consider race or ethnicity in the selection of board members, and that, to the contrary, such consideration is illegal — or, at least, raises serious legal issues.”
Alas, the SEC last week said nothing of the sort, and has only nice things to say about diversity efforts.