November 18, 2019 - Issue: Vol. 165, No. 184 — Daily Edition116th Congress (2019 - 2020) - 1st Session

[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.

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