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REVEALED: The big technology companies that are bucking NASDAQ's push to 'diversify' their white, male boardrooms
Several Nasdaq-listed firms are bucking the exchange's rules for getting more women, minority, and LGBTQ+ directors into their white, male-dominated boardrooms, the Mail can reveal.
The discount website Groupon, casino owner Red Rock Resorts and others have reported that they aren't meeting Nasdaq's diversity, equity, and inclusion (DEI) regulations.
Other firms to dodge DEI quotas in their proxy statements include cannabis investor Chicago Atlantic Real Estate Finance and American Coastal Insurance, an underwriter.
Nasdaq required thousands of companies to have at least one woman, minority or LGBTQ+ director by the end of 2023 — or else explain why not.
The index can de-list firms that fail to meet its controversial DEI rules, which were endorsed by the Democratic-led Securities and Exchange Commission, and face a legal challenge.
Several Nasdaq-listed firms say they've struggled to find the right diversity candidate for their boards.
The technology exchange required thousands of companies to have at least one diverse director by the end of 2023 — or else explain why not.
Companies without diverse boards generally said they supported the idea, but had struggled to find the right candidates or did not want to add new seats to shake up their boardrooms.
In their disclosures, firms said they could not find a 'suitable' minority contender, or blamed a 'rigorous and intrusive' licensing process for hampering diversity-hiring efforts.
One company, Oxford Square Capital, which invests in corporate debt, said it didn't ask whether its five directors were diverse because it wanted to protect their privacy.
The disclosures come as a case before a federal appeals court could close the window into corporate board DEI within months, letting companies decide whether they continue to share the information.
Nasdaq's rules violate the First Amendment by unnecessarily forcing companies to say something that could lead to boycotts, divestment and other fallout, says lawyer Peggy Little.
She represents the National Center for Public Policy Research, a conservative think tank that is challenging the regulations in the US Court of Appeals for the Fifth Circuit.
'What we are talking about here is compelled speech,' says Little.
Companies 'have concern about what the consequences of that are.'
The court is expected to rule as soon as this year.
The lawsuit comes as conservative consumers boycott an ever-growing list of firms they perceive as having 'gone woke,' including by embracing DEI targets.
Bud Light, Target, Cracker Barrel, Tractor Supply, The North Face, Harley-Davidson, and many others have been affected.
The disclosures, which were reviewed by Bloomberg Law, only offer a snapshot into reporting by Nasdaq-listed companies without diverse boards.
The discount website Groupon says it's open to adding a diverse director in the future.
Groupon last year lost its only diverse director — Helen Vaid — who did not stand for re-election.
Under the rules, companies are free to disclose why they don't have diverse boards however they wish on their proxy statements or websites.
Nasdaq doesn't judge companies' reasons for having non-diverse boards, it only checks whether they provide explanations, says the exchange.
The 'disclosures provide stakeholders with a better understanding of the company's current board composition and its philosophy regarding diversity,' Nasdaq's guidance says.
The disclosure rules aren't subject to the First Amendment because Nasdaq is a private entity, a lawyer for the exchange said last year.
The National Center for Public Policy Research, however, says Nasdaq is a government actor, and is not allowed to compel speech.
Nasdaq declined the Mail's request for comment.
Groupon, American Coastal, Red Rock Resorts and Chicago Atlantic Real Estate Finance all said they are open to adding a diverse director in the future, according to their 2024 proxy statements.
But they face obstacles to moving beyond white male boards, they added.
Groupon last year lost its only diverse director — Helen Vaid — who did not stand for re-election, and has no current plans to fill her seat or change the board's composition, the company said.
Chicago Atlantic Real Estate Finance, American Coastal and Red Rock Resorts all said they faced difficulties finding qualified, diverse candidates for their boards.
American Coastal said it had been 'unsuccessful in attracting viable candidates.'
Red Rock Resorts, which owns Las Vegas casinos, said its ability to attract competent, diverse candidates is hindered by the 'relatively limited pool of potential directors.'
Few contenders are 'willing to subject themselves, as well as their families, to the rigorous and intrusive process necessary to obtain a gaming license,' which is often required, the company said.
Chicago Atlantic Real Estate Finance, which lends to state-licensed pot operators, doesn't have a diverse director because it has 'not yet identified a suitable candidate,' its 2024 statement says.
Peggy Little, a lawyer for the National Center for Public Policy Research, says she's fighting Nasdaq's 'compelled speech.'
Nasdaq lists more than 5,000 domestic and foreign companies, with a major focus on technology.
Still, it is 'vetting candidates, and we fully intend to add a diverse member in the foreseeable future,' said CFO Phil Silverman.
Spokespeople for Groupon and Red Rock Resorts declined to comment.
An American Coastal representative didn't respond to requests for comment.
Companies may prefer to avoid spotlighting how they handle board diversity, but it doesn't make the rules illegal, said Lawrence Cunningham, a George Washington University Law School expert on corporate governance.
Board diversity is on the rise, and Nasdaq tried to find a useful way to gauge it, he added.
'Nasdaq is trying to be realistic about what has happened, rather than prescriptive or normative in its own worldview,' Cunningham says.
Many companies that embraced DEI policies in the wake of the cop killing of unarmed black man George Floyd in May 2020 have stepped back from them for fear of irking conservative customers.
For some, DEI schemes are important and necessary, as they can help to overcome historical racism and sexism and make it easier for people of all backgrounds to get ahead in education and work.
Critics say it's a form of reverse discrimination that unfairly blows back on straight, white men.