The Securities & Exchange Commission this past July has proposed amending Item 407(c)(2)(v) of Regulation S-K to require disclosure of racial and ethnic diversity on corporate and related nonprofit fund boards. We have submitted a comment of opposition because we believe this rule change to be a highly misguided intrusion into corporate governance.
Even assuming benign intent - and that is a stretch of an assumption - the outcome would be anything but benign. Anyone with sound instincts knows that any submitted information would be fair game for organizations seeking to tie executive compensation to the creation of a rigorously-monitored affirmative action spoils system.
"Diversity training" is a term that describes a brief, but intensive program of lectures, presentation of written and audio-visual materials, and perhaps most ominously, participation in role-playing exercises, all of which are intended to heighten employee awareness of potential sources of racial and ethnic conflict. The report argues that diversity training is counterproductive and instead results in weakened company morale and increased racial resentment.