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The Nasdaq stock exchange, the second-largest exchange in the world, wants to impose a quota system on corporate boards of companies that list on the NASDAQ.
Nasdaq is serious…and specific. The new rule would require boards to have a minimum of one woman director and one minority or LGBTQ director. Small firms could apparently get by with two women.
Do we really want to start affirmative action for American business?
One can only hope the entrepreneurs that start businesses choose NYSE or other exchanges to list instead of submitting themselves to NASDAQ’s social mission.
Here’s what Warren Buffet wrote about selecting board candidates in a 1996 shareholder letter.
“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. . . .
“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.”
