Hunton Retail Law Resource

On August 6, 2021, the Securities and Exchange Commission (SEC) approved new Nasdaq rules (Rules 5605(f) and Rule 5606) aimed at advancing diversity among board members of Nasdaq-listed companies and increasing disclosure of diversity statistics. Nasdaq’s new rules underscore the increasing attention in recent years in addressing environmental, social and governance (ESG) issues at the board level and creating new compliance obligations for Nasdaq-listed companies.

In a recent post (“Environmental, Social and Corporate Governance: What are the Risks, Really?”), we discussed the various risks, trending issues, and emerging concerns arising from environmental, social, and corporate governance factors (“ESG”). As noted previously, neglecting ESG considerations can result in a number of risks to a company, including risks associated with the reputational, financial, and legal impacts of handling ESG issues poorly. We also observed how managing ESG issues well can enhance corporate value and performance, and create competitive advantages for companies. Given these emerging risks and opportunities, it is perhaps unsurprising that ESG has begun to play a larger role in the M&A context in recent years.

On September 21, 2017, the Securities and Exchange Commission ("SEC") and the staff of the SEC’s Division of Corporation Finance issued interpretive guidance to assist public companies with complying with the “pay ratio” rule and to address compliance concerns with respect to the rule’s flexible framework. According to the SEC press release, “[the] guidance on pay ratio...encourages companies to use the flexibility incorporated in our prior rulemaking to reduce costs of compliance.” The new guidance provides some accommodations that publicly traded retailers ...