(Reuters) -Nasdaq Inc Chief Executive Adena Friedman will take on the additional role of chair of the board on Jan. 1, the company said late on Monday, executing a playbook similar to its peers but frowned upon by some corporate governance advocates.
During her five years as CEO, Nasdaq has diversified its revenue away from its traditional exchange business, into software and anti-financial crime technology, most recently through its $2.75 billion acquisition of fraud detection firm Verafin.
“Adena is incredibly deserving of this appointment. As Nasdaq’s CEO, she has successfully led the company in a new strategic direction,” said current Chair Michael Splinter, who will become lead independent director.
The move comes as Nasdaq is becoming a bigger player in the environmental, social and governance space, and as it champions board diversity. Last year, Nasdaq won regulatory approval for a rule requiring companies listed on its exchange to publicly disclose the diversity credentials of their boards.
By 2026, Nasdaq-listed companies will be required to have one director who self-identifies as female and another as an underrepresented minority or LGBTQ+, or explain why they do not have such representation.
Some corporate governance experts have criticized the practice of combining CEO and chairperson roles, saying separating them improves accountability and provides checks and balances in the boardroom. But others argue splitting the jobs can cause confusion over who is in charge.
California Public Employees’ Retirement System, the largest U.S. pension fund, objects to combining the roles, while BlackRock, the world’s largest asset manager, does not, said securities law professor Ann Lipton of Tulane University School of Law.
When the roles are combined, Blackrock would also like boards to have a lead independent director with certain substantive powers, she said.
Around 45% of public companies have dual CEO/chairperson roles, said Yale School of Management professor Jeffrey Sonnenfeld.
“Despite public media discussion, there is NO research that indicates that the separation of roles led to superior performance or better governance,” he said in an email.
Intercontinental Exchange Inc, CME Group Inc and Cboe Global Markets Inc also have CEOs holding chairperson titles.
(Reporting by Niket Nishant and Anirban Chakroborti in Bengaluru and John McCrank in New York; Editing by Anil D’Silva, Richard Chang and David Evans)
