[Congressional Record Volume 165, Number 184 (Monday, November 18, 2019)]
[House]
[Pages H8927-H8929]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
IMPROVING CORPORATE GOVERNANCE THROUGH DIVERSITY ACT OF 2019
Mr. GREEN of Texas. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 5084) to amend the Securities Exchange Act of 1934 to
require the submission by issuers of data relating to diversity and for
other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5084
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Improving Corporate
Governance Through Diversity Act of 2019''.
SEC. 2. SUBMISSION OF DATA RELATING TO DIVERSITY BY ISSUERS.
Section 13 of the Securities Exchange Act of 1934 (15
U.S.C. 78m) is amended by adding at the end the following:
``(s) Submission of Data Relating to Diversity.--
``(1) Definitions.--In this subsection--
``(A) the term `executive officer' has the meaning given
the term in section 230.501(f) of title 17, Code of Federal
Regulations, as in effect on the date of enactment of this
subsection; and
``(B) the term `veteran' has the meaning given the term in
section 101 of title 38, United States Code.
``(2) Submission of disclosure.--Each issuer required to
file an annual report under subsection (a) shall disclose in
any proxy statement and any information statement relating to
the election of directors filed with the Commission the
following:
``(A) Data, based on voluntary self-identification, on the
racial, ethnic, and gender composition of--
``(i) the board of directors of the issuer;
``(ii) nominees for the board of directors of the issuer;
and
``(iii) the executive officers of the issuer.
``(B) The status of any member of the board of directors of
the issuer, any nominee for the board of directors of the
issuer, or any executive officer of the issuer, based on
voluntary self-identification, as a veteran.
``(C) Whether the board of directors of the issuer, or any
committee of that board of directors, has, as of the date on
which the issuer makes a disclosure under this paragraph,
adopted any policy, plan, or strategy to promote racial,
ethnic, and gender diversity among--
``(i) the board of directors of the issuer;
``(ii) nominees for the board of directors of the issuer;
or
``(iii) the executive officers of the issuer.
``(3) Alternative submission.--In any 1-year period in
which an issuer required to file an annual report under
subsection (a) does not file with the Commission a proxy
statement relating to the election of directors or an
information statement, the issuer shall disclose the
information required under paragraph (2) in the first annual
report of issuer that the issuer submits to the Commission
after the end of that 1-year period.
``(4) Annual report.--Not later than 18 months after the
date of the enactment of this subsection, and annually
thereafter, the Commission shall submit to the Committee on
Financial Services of the House of Representatives and to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and publish on the website of the Commission a report
that analyzes the information disclosed pursuant to
paragraphs (1), (2), and (3) and identifies any trends in
such information.
``(5) Best practices.--
``(A) In general.--The Director of the Office of Minority
and Women Inclusion of the Commission shall, not later than
the end of the 3-year period beginning on the date of the
enactment of this subsection and every three years
thereafter, publish best practices for compliance with this
subsection.
``(B) Comments.--The Director of the Office of Minority and
Women Inclusion of the
[[Page H8928]]
Commission may, pursuant to subchapter II of chapter 5 of
title 5, United States Code, solicit public comments related
to the best practices published under subparagraph (A).''.
SEC. 3. DIVERSITY ADVISORY GROUP.
(a) Establishment.--The Securities and Exchange Commission
shall establish a Diversity Advisory Group (the ``Advisory
Group''), which shall be composed of representatives from the
government, academia, and the private sector.
(b) Study and Recommendations.--The Advisory Group shall--
(1) carry out a study that identifies strategies that can
be used to increase gender, racial, and ethnic diversity
among members of boards of directors of issuers; and
(2) not later than 9 months after the establishment of the
Advisory Group, submit a report to the Commission, the
Committee on Financial Services of the House of
Representatives, and the Committee on Banking, Housing, and
Urban Affairs of the Senate that--
(A) describes any findings from the study conducted
pursuant to paragraph (1); and
(B) makes recommendations of strategies that issuers could
use to increase gender, racial, and ethnic diversity among
board members.
(c) Annual Report.--Not later than 1 year following the
submission of a report pursuant to subsection (b), and
annually thereafter, the Commission shall submit a report to
the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate that describes the status of
gender, racial, and ethnic diversity among members of the
board of directors of issuers.
(d) Public Availability of Reports.--The Commission shall
make all reports of the Advisory Group available to issuers
and the public, including on the website of the Commission.
(e) Definitions.--For the purposes of this section:
(1) Issuer.--The term ``issuer'' has the meaning given the
term in section 3 of the Securities Exchange Act of 1934.
(2) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Texas (Mr. Green) and the gentlewoman from Missouri (Mrs. Wagner) each
will control 20 minutes.
The Chair recognizes the gentleman from Texas.
General Leave
Mr. GREEN of Texas. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days in which to revise and extend their
remarks on this legislation and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. GREEN of Texas. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in strong support of H.R. 5084, the Improving
Corporate Governance Through Diversity Act of 2019.
I thank the chair of our Subcommittee on Consumer Protection and
Financial Institutions, the Honorable Gregory Meeks, and the chair of
the Subcommittee on Investor Protection, Entrepreneurship, and Capital
Markets, the Honorable Carolyn Maloney, for this incredibly important
piece of legislation.
According to Deloitte's 2017 board diversity survey, 90 percent of
companies surveyed agreed that increased board diversity will improve
their company's ability to innovate as well as their overall business
performance.
Given the impact on performance, investors have an interest in the
extent to which companies include diverse perspectives and people in
their boardrooms and senior executive ranks.
Despite the acknowledgment by companies that the highest levels of
their organizations should reflect the diversity of their shareholders,
consumers, and America at large, the Alliance for Board Diversity
reported that, among Fortune 500 companies, 80.7 percent of new board
directors in 2017 were White men.
To address the lack of transparency and to shine a light on the lack
of representation of women and minorities in corporate boardrooms and
in the C-suite, H.R. 5084 would require public companies to annually
disclose the voluntarily self-identified gender, race, ethnicity, and
veteran status of their board of directors and nominees and senior
executive officers.
This bill would also establish a diversity advisory group at the
Securities and Exchange Commission and require the agency's Office of
Minority and Women Inclusion to publish best practices for compliance
with diversity reporting requirements.
We must ensure that the leadership of corporate America reflects the
growing diversity of our Nation. Transparency and disclosure are two
actions that allow progress toward racial and gender parity at the
highest levels of corporations.
Mr. Speaker, I urge my colleagues to join me in supporting H.R. 5084,
and I reserve the balance of my time.
Mrs. WAGNER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, this Congress, our committee has held multiple hearings
focused on strengthening diversity and inclusion in our financial
system and beyond, including a full committee hearing examining
America's boardrooms.
Witness testimony makes clear that women and minorities are
underrepresented in leadership positions throughout the financial
services sector. This bill will help move companies in the right
direction.
We know that women hold just 26 percent of senior management
positions and only 15 percent of executive positions in the finance
industry. These figures have stayed relatively flat over the past
decade.
Corporate leaders know the value of having a wide range of
perspectives and experiences in the boardroom and are being proactive
in their efforts to diversify leadership in the financial services
industry. Last year, 91 percent of board directors reported taking
steps to increase diversity. Just last month, Citigroup announced the
promotion of Jane Fraser to lead Citigroup's global consumer banking,
setting her up to be the first female CEO of a major bank.
The private sector is working proactively to achieve more diversity,
and this bill will give us even more data to measure progress,
including with respect to hiring veterans. Companies should also work
to help our servicemen and -women reacclimate into civilian life. This
bill will reinforce the work that industry is already doing to help
employ our veterans.
Witnesses who testified before the committee believe that the
disclosures in this bill are a step in the right direction, in part
because a large percentage of companies already do it annually. In
fact, more than 40 percent of publicly traded companies already
disclose information related to the gender, race, and ethnic makeup of
their boards.
I thank Congresswoman Maloney and Congressman Meeks for working on
this bill. I am grateful to the ranking member and the chairman of the
Committee on Financial Services. Mr. Speaker, I reserve the balance of
my time.
Mr. GREEN of Texas. Mr. Speaker, I yield 3 minutes to the gentleman
from New York (Mr. Meeks), the chair of our Subcommittee on Consumer
Protection and Financial Institutions.
Mr. MEEKS. Mr. Speaker, today, I am especially proud to rise in
support of a bill that has been worked on very hard.
I want to first thank Chairwoman Waters and Ranking Member McHenry;
of course, my colleague, the chair of the Subcommittee on Investor
Protection, Entrepreneurship, and Capital Markets, Carolyn Maloney;
Chairwoman Beatty; and, of course, the gentlewoman from Missouri (Mrs.
Wagner) for all of their support in working to pull this bill together,
the Improving Corporate Governance Through Diversity Act of 2019.
This legislation is the culmination of years of methodical work and
the continuation of priorities dating back to our Wall Street reform
work following the financial crisis. Indeed, as my colleagues who were
here in Congress in 2009 and 2010 will remember well, many of us, in
the wake of the financial crisis, were vocal about how the lack of
diversity and inclusion across corporate America and, in particular, at
senior levels and on boards of financial institutions helped contribute
to the financial crisis.
Corporate America should reflect the diversity of the markets they
seek to serve. This is the right thing to do and the smart business
decision to make.
H.R. 5084, the Improving Corporate Governance Through Diversity Act,
focuses on disclosures and transparency. I firmly believe that
transparency is the first step to accountability.
Specifically, the bill does the following.
[[Page H8929]]
Public companies will be required to publish diversity data annually
in their proxy statements, based on voluntary self-identification, on
the racial, ethnic, and gender composition of their board of directors,
the nominees for the board of directors, and executive officers.
Similarly, companies will publish data on those who voluntarily self-
identified as veterans. Public companies will also have disclosure
requirements on the adoption of any board policy, plan, or strategy to
promote diversity.
The bill directs the Director of the Office of Minority and Women
Inclusion of the SEC to publish, every 3 years, best practices for
compliance with the disclosure requirements of this bill, including
Federal solicitation of public comments. The bill also directs the
Office of Minority and Women Inclusion to establish an advisory
council, which includes issuers and investors, to advise on these best
practices.
This is a simple, effective, and impactful bill that, through
transparency and reporting, informs markets, investors, and employees
about the status of diversity and inclusion across corporate America.
This bill has earned support that is very broad, from civil rights
groups, such as the NAACP and the National Urban League, as well as
from the Chamber of Commerce, the Council of Institutional Investors,
and LPL Financial, the Nation's largest independent broker-dealer.
It is rare for a bill to have such broad support from civil rights
groups, corporate America, and the investment community, but this broad
support is evidence of the urgency and commonsense nature of this
legislation. This bill will also gain the support of many of our
Republican colleagues across the aisle, both in the committee and here
on the floor.
Mr. Speaker, I ask, therefore, that all Members vote in support of
this bill.
Mrs. WAGNER. Mr. Speaker, I reserve the balance of my time.
Mr. GREEN of Texas. Mr. Speaker, I yield 3 minutes to the gentlewoman
from New York (Mrs. Carolyn B. Maloney), the chair of the Subcommittee
on Investor Protection, Entrepreneurship, and Capital Markets.
Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I thank the
gentleman for leading and for yielding me the time.
Mr. Speaker, I rise in strong support of H.R. 5084, and I thank my
good friend and colleague, Congressman Meeks, for his tremendous
leadership on this bill. We have been working together on it for a long
time, and I am proud to be an original cosponsor.
I also thank Chairwoman Waters for her longtime leadership on these
issues and for working with me and Mr. Meeks on this bill.
The bill is very simple, but the goal is extremely important:
increasing diversity in corporate leadership.
One of the key pieces of this, I believe, is getting more women and
minorities in corporate leadership positions. Leaders set the tone, and
they set the priorities.
I asked the GAO to study this issue in 2015. They found that women
were badly underrepresented on corporate boards. They also found that,
if the current trends continue, it would take more than 40 years for
women to reach parity with men on corporate boards. Clearly, something
needs to change.
Let's be clear. Increasing diversity in corporate leadership is not
just a social issue; it is good business, too. Study after study has
shown that companies with greater gender, racial, and ethnic diversity
on their boards perform better financially.
This bill would help investors accomplish this by requiring public
companies to report the gender, racial, and ethnic composition of their
boards in their annual reports.
The bill would also establish a diversity advisory group at the SEC,
which would study strategies to increase gender, racial, and ethnic
diversity on corporate boards, because the truth is that making
meaningful progress on corporate diversity is going to require a range
of different policies in addition to the improved disclosures in this
bill.
{time} 1730
I want to be sure to thank Ranking Member McHenry and my good friend
and colleague Ann Wagner for their strong support. Their leadership on
the other side of the aisle has been instrumental in getting bipartisan
support for this very important bill that has wide support across the
community.
I urge my colleagues to support this bill.
Mrs. WAGNER. Mr. Speaker, I urge all my colleagues to support H.R.
5084, the Improving Corporate Governance Through Diversity Act of 2019.
I yield back the balance of my time.
Mr. GREEN of Texas. Mr. Speaker, I, too, encourage my colleagues to
please support this important piece of legislation. It will make
meaningful change.
I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Texas (Mr. Green) that the House suspend the rules and
pass the bill, H.R. 5084.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. GREEN of Texas. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________