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Frequently Asked Questions
  Enhancing Transparency in Regulation
Identification Number 1480
Enhancing Transparency in Regulation
Publication Date: January 10, 2018 

At Nasdaq, we believe transparency of our Listing Rules, policies and procedures results in fairer and more effective regulation. To this end, in 2012, Nasdaq created the Listing Center's Reference Library, which today houses more than 400 frequently asked questions about listing matters, 100 anonymized versions of appellate listing decisions and 350 written Staff interpretations of the Listing Rules. To reinforce the critical role transparency plays in our regulatory program, we continue to develop and enhance the utility of our Listing Center's Reference Library website and expand the information available through this free web portal.

It is with this in mind that Nasdaq Staff, in conjunction with the Nasdaq Listing Hearing and Review Council, developed the Listing Qualifications Transparency Report. This report includes anonymized information regarding the facts and circumstances that prompted Listing Qualifications Staff and Hearings Panels to exercise the discretion afforded by the Listing Rules to impose additional or more stringent criteria or to shorten time frames otherwise available to companies. It also describes instances when, following Listing Qualifications Staff review of certain share issuances, listed companies made significant changes to their transactions. We believe that sharing this information helps companies better understand how Nasdaq applies its listing rules, which helps companies and their advisors better comply with those rules. It is our expectation that we will prepare this report annually. We look forward to your comments, which can be emailed to us at

View the Transparency Report Here >>
Publication Date*: 1/10/2018 Mailto Link Identification Number: 1480
Frequently Asked Questions
  It’s Time for Companies to Improve Board Diversity Disclosure
Identification Number 1304
It’s Time for Companies to Improve Board Diversity Disclosure
Publication Date: January 12, 2017

In this post on the National Association of Corporate Directors’ Board Leader’s Blog, Nasdaq highlights its research, which indicates that many companies have a compelling story to tell about their board composition and diversity of age, gender, race, and skill sets. As companies prepare for the upcoming proxy season, Nasdaq encourages them to consider some simple disclosure enhancements that will increase the transparency around their diversity, including disclosing not only a board member’s gender and age, but also their ethnicity, skills, and experience.

Publication Date*: 1/12/2017 Mailto Link Identification Number: 1304
Frequently Asked Questions
  Hidden Director Conflicts Should Be Disclosed to Investors by Edward Knight
Identification Number 1214
Hidden Director Conflicts Should Be Disclosed to Investors by Edward Knight
Publication Date: June 16, 2016

This article was originally published by Institutional Investor on June 16, 2016.
Shareholder campaigns aimed at radically reshaping corporate policy and governance — and extracting short-term profits at the expense of long-term value creation — are once again in the news. Many think they are a recent phenomenon. But that’s not the case.

In 1986 vaunted management consultant Peter Drucker lambasted short-termism in an editorial in the Wall Street Journal, declaring, “Everyone who has worked with American managements can testify that the need to satisfy the pension fund manager’s quest for higher earnings next quarter, together with the panicky fear of the raider, constantly pushes top managements toward decisions they know to be costly, if not suicidal, mistakes.”

And the evidence today — the intense focus on quarterly earnings, diminishing capital investment by U.S. corporations, shrinking CEO tenure and, according to Ana Avramovic, director of trading strategy at Credit Suisse in New York, falling average holding period for shareholders to 17 weeks, among other things — continues to demonstrate a push toward decisions that can be costly for shareholders.

This situation is potentially calamitous. Short-termism, often driven by activists, can have grave implications for corporations, for our economy and sometimes for society overall. Innovation, discovery and hiring are curtailed when R&D projects are put on hold or canceled because of short-term pressures. Halted development undermines long-term U.S. competitiveness, to say nothing of potentially postponing lifesaving medicines or cutting-edge technologies from reaching the public. Short-termism also leads to mispricing, misallocation of assets and a lack of reliable information about long-term prospects. But because activists are shareholders, this dynamic puts corporate leadership in a bind. Nobody will disagree that a diverse pool of investors is a goal of any business and that none should be turned away.

Some activist groups today do claim they are in it for the long haul, bringing ideas, questions and concerns to the attention of corporate boards and management, which is an essential part of any healthy relationship between a company and its shareholders. Beyond this engagement by some, however, a movement is afoot in which some board members are paid directly by activist investors, often based on benchmarks such as an increase in share price over a fixed term.

This relation is the case with two directors on Dow Chemical Co.’s board who have a special compensation arrangement with hedge fund firm Third Point, which agreed to pay them stock appreciation rights that increase in value as Dow stock increases in price. At the very least, it is unclear how this director incentive-compensation arrangement does not establish an explicit obligation to Third Point at the expense of other shareholders, lead to conflicts on the board that skew the alignment of interests with shareholders and undercut the fundamental board responsibility to oversee management in the best interests of all shareholders. The question also arises as to whether these payments incentivize risky behavior by the very body that is responsible for ensuring that executive compensation does not do so.

So, in view of such an arrangement, how do we help ensure the healthy functioning of boards without compromising the role of shareholders?

We believe one way is to require transparency around these special compensation arrangements. Full disclosure would shed light on the conflicts of interest generated by these arrangements, steer the focus away from short-term results and benefit investors by providing information useful for their investment and voting decisions.

That’s why, earlier this year, Nasdaq filed a proposal with the Securities and Exchange Commission that calls for Nasdaq-listed companies to disclose “all agreements and arrangements between any director or nominee and any person or entity ... that provide for compensation or other payment in connection with that person’s candidacy or service as a director.” Where disclosure is required, the public company would need to identify the parties and material terms of the agreement or arrangement. This proposal is simple to enact, practical and in the best interests of shareholders and corporations alike.

Activist investors have woven themselves into the fabric of corporate dynamics, with mixed results. They do have a positive and important role to play. Boards and management must be challenged by shareholders so they can continue to develop better companies. Drucker recognized this dynamic when he wrote that the manager’s job is to “keep his nose to the grindstone while lifting his eyes to the hills.”

One way to strengthen the healthy symbiosis of checks and balances between corporate leadership and shareholders is to disclose third-party payments to board members. This openness would have a mutually beneficial long-term focus. If these hidden conflicts of interest are brought into the light, we can keep our eyes on the hills and write a chapter in our capitalist story that takes a positive turn.
Publication Date*: 6/16/2016 Mailto Link Identification Number: 1214
Frequently Asked Questions
  Building Investors' Trust through Transparency
Identification Number 1157
Building Investors' Trust through Transparency
Publication Date: March 29, 2016 

Transparency around the composition and qualifications of a board builds trust, as it helps investors evaluate the board’s independence and potential effectiveness.  With this in mind, Nasdaq took a close look at the board composition disclosure in our recently filed 2016 Proxy Statement to ensure that our presentation reflected important emerging trends in disclosure and could serve as a roadmap for our listed companies as they drafted their proxies.  It is in this spirit that we expanded our board disclosure to include:  

  • A board skills matrix, identifying the skills, knowledge, experience and capabilities of each director most relevant to help the board meet both current and future challenges.
  • A director qualifications analysis, detailing the tenure, age and skills of board members and illustrating the cognitive diversity of the board, with a range of experience, knowledge and perspectives.
Nasdaq also provided enhanced discussion of board, committee and individual performance assessments throughout the proxy, explaining the mechanics of how the board evaluation process is conducted and utilized. 
Publication Date*: 3/29/2016 Mailto Link Identification Number: 1157
Frequently Asked Questions
  Why CEO Succession Planning Disclosure Matters
Identification Number 1158
Why CEO Succession Planning Disclosure Matters
Publication Date: March 9, 2016

CEO succession planning is one of the most important responsibilities of a corporate board. Institutional investors--BlackRock, CalPERs, and CalSTRs among them--are calling for robust disclosure of CEO succession planning in their corporate governance policies. Shareholders submit proxy proposals on the issue. But does CEO succession planning disclosure make a difference in the success or failure of a company in transitioning to a new CEO?

According to Does CEO Succession Planning Disclosure Matter, a new study by the Investor Responsibility Research Center Institute, it does. Companies that successfully execute CEO transitions are far more likely to have disclosed CEO transition plans to shareholders. On the other hand, 63% of companies that did not execute a successful transition provided little or no disclosure. The report also reveals that while such disclosure is increasing, it is overall lacking among the majority of companies surveyed.

Among the key findings of the report were the following:

  • 24%of the issuers surveyed provided no disclosure regarding succession planning in the two year period prior to the CEO change.
  • When disclosure was provided, it was relatively poor: just over half the issuers surveyed disclosed who had responsibility for the succession planning, 10%disclosed how often the board reviewed succession planning, and 2% of issuers described the board’s process for identifying CEO candidates.
  • Less than one in ten companies surveyed mentioned the existence of an emergency plan for replacing a CEO, for example in the event of death or incapacitation.
Also of interest was that 20% of companies executing transitions had to replace the new CEO within a two year period. Of those companies, 48% of the CEOs resigned.

Publication Date*: 4/20/2016 Mailto Link Identification Number: 1158
Frequently Asked Questions
  Nasdaq Companies Recognized for Outstanding Proxy Disclosure
Identification Number 1159
Spotlight Promo
Nasdaq Companies Recognized for Outstanding Proxy Disclosure
Publication Date: July 30, 2015 just announced the results of its first annual Proxy Disclosure Awards and a number of Nasdaq issuers were among those recognized. These proxy statements help illustrate that innovation in content and formatting can certainly improve readability for stockholders. Use this list to get some great ideas for your next proxy!

See a list of all the winners by category here >
Publication Date*: 7/30/2015 Mailto Link Identification Number: 1159
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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