"NASDAQ is Nuts"

You would comply if your Zoom board meetings looked like the above  (alderkoten image)

NASDAQ has proposed a diversity rule for corporate boards of directors: [bold added]

the rules would require most Nasdaq-listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+. Foreign companies and smaller reporting companies would have additional flexibility in satisfying this requirement with two female directors.

An "underrepresented minority" is defined as "Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, [or] two or more races or ethnicities."

Companies may be excused from compliance by "explaining their rationale for not meeting that objective", but it's probably easier not to get on the wrong side of the woke crowd. Just add a board seat or two and fill it with someone who checks the appropriate boxes. Your humble blogger qualifies to be in this group and respectfully raises his hand to be included in this gravy train necessary correction to the long-standing biases of corporate America.

The WSJ editorial board lets Warren Buffett, the greatest investor in American history, do the talking: [bold added]

The more we think about the new racial, gender and LGBTQ mandates for corporate directors that Nasdaq announced on Tuesday, the more absurd they seem.

How is a company supposed to find out if a board candidate is gay if that isn’t already known? Is it supposed to hire private detectives to look into it? Once that person joins the board, does the company then have to broadcast his or her sexual orientation in the annual report so progressives can be satisfied that the quota is met? We could go on.

For a dose of sanity, we thought readers might enjoy Warren Buffett’s views on what he looks for in a director. The following is from the legendary investor’s 2006 letter to shareholders in Berkshire Hathaway’s annual report:

“In selecting a new director, we were guided by our long-standing criteria, which are that board members be owner-oriented, business-savvy, interested and truly independent. . . .

Can't we all just get along?

“Charlie [ Munger, Berkshire vice chairman] and I believe our four criteria are essential if directors are to do their job—which, by law, is to faithfully represent owners. Yet these criteria are usually ignored. Instead, consultants and CEOs seeking board candidates will often say, ‘We’re looking for a woman,’ or ‘a Hispanic,’ or ‘someone from abroad,’ or what have you. It sometimes sounds as if the mission is to stock Noah’s ark. Over the years I’ve been queried many times about potential directors and have yet to hear anyone ask, ‘Does he think like an intelligent owner?’

“The questions I instead get would sound ridiculous to someone seeking candidates for, say, a football team, or an arbitration panel or a military command. In those cases, the selectors would look for people who had the specific talents and attitudes that were required for a specialized job. At Berkshire, we are in the specialized activity of running a business well, and therefore we seek business judgment.”

Nasdaq is nuts.