DRAFT 2.6.2017

SECURITIES AND EXCHANGE COMMISSION

ADVISORY COMMITTEE ON 

SMALL AND EMERGING COMPANIES

Washington, DC 20549-3628

 February __, 2017

The Honorable Michael S. Piwowar

Acting Chairman

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549-1070

Dear Acting Chairman Piwowar:

As you know, the Securities and Exchange Commission organized the Advisory Committee on 

Small and Emerging Companies to provide the Commission with advice on the Commission’s 

rules, regulations, and policies with regard to its mission of protecting investors, maintaining 

fair, orderly, and efficient markets, and facilitating capital formation, as they relate to the 

following: 

(1) capital raising by emerging privately held small businesses and publicly traded 

companies with less than $250 million in public market capitalization;

(2) trading in the securities of such businesses and companies; and 

(3) public reporting and corporate governance requirements to which such businesses 

and companies are subject.

On behalf of the Advisory Committee, we are pleased to submit the enclosed recommendations 

regarding corporate board diversity. These recommendations were discussed at Advisory 

Committee meetings held on October 5 and December 7, 2016, and approved by the members of 

the Advisory Committee present and voting at a meeting held February 15, 2017. 

We and the other members of the Advisory Committee are prepared to provide any additional 

assistance that the Commission or its staff may request with respect to these recommendations.

Respectfully submitted on behalf of the Advisory Committee,

Stephen M. Graham Sara Hanks

Committee Co-Chair Committee Co-Chair
DRAFT 2.6.2017

Members of the Advisory Committee

Robert Aguilar

Xavier Gutierrez

Brian Hahn

Jenny Kassan

Catherine V. Mott*

Jonathan Nelson

Patrick Reardon

Lisa Shimkat*

Annemarie Tierney

Gregory C. Yadley

Laura Yamanaka

Non-voting members

Michael Pieciak

* Not present at the meeting held on October 5, 2016.

Enclosure

cc: Acting Chairman Michael S. Piwowar 

Commissioner Kara M. Stein

Shelley E. Parratt 

Elizabeth Murphy

Sebastian Gomez Abero

Julie Z. Davis
DRAFT 2.6.2017

U.S. Securities and Exchange Commission 

Advisory Committee on Small and Emerging Companies 

Recommendation Regarding Disclosure of Board Diversity

From the October 5, 2016 and December 7, 2016 Meetings

AFTER CONSIDERING THAT: 

1. The Advisory Committee’s objective is to provide the U.S. Securities and Exchange 

Commission (the “Commission”) with advice on its rules, regulations and policies with 

regard to its mission of protecting investors, maintaining fair, orderly and efficient markets, 

and facilitating capital formation, as they relate to, among other things, capital raising by 

emerging privately held small businesses and publicly traded companies with less than $250 

million in public market capitalization.

2. Board diversity has been associated with improved competitiveness and talent management, 

greater access to capital, more sustainable profits, and better relations with stakeholders and 

therefore plays an important role in capital formation for small and emerging companies.

3. Accordingly, information regarding board diversity is important to stockholders, employees 

and customers.

4. In 2009, the Commission adopted a rule (Item 407(c)(2)(vi) of Regulation S-K (the “Rule”)) 

requiring companies to disclose in their proxy statements whether a nominating committee 

considers diversity in identifying nominees for the company’s board of directors, and if it is 

considered, how. The Rule also requires that if the company has a policy with regard to the 

consideration of diversity in identifying director nominees, how that policy is implemented 

and how its effectiveness is assessed. 

5. The Rule has failed to generate information useful to stockholders, employees and customers 

in assessing board diversity.

THE COMMITTEE RECOMMENDS THAT: 

The Commission amend Item 407(c)(2) of Regulation S-K to require issuers to describe, in 

addition to their policy with respect to diversity, if any, the extent to which their boards are 

diverse. While, generally, the definition of diversity should be up to each issuer, issuers should 

include disclosure regarding race, gender, and ethnicity of each member/nominee as selfidentified by the individual. While disclosure should be the default, issuers should have the 

option to opt-out.