Proposed Corporate Governance Standards Require Approval of Stock Option PlansWashington, DC, August 23, 2002 - The New York Stock Exchange (NYSE) has proposed a set of corporate governance standards that, among other things, would make NYSE-listed companies' equity compensation plans subject to shareholder approval, a requirement strongly supported by the Institute in a recent statement and comment letter. The corporate governance standards proposed by the NYSE are consistent with previous Institute recommendations on several issues, including: - audit committees' authority to hire, fire, and approve all audit engagement fees for independent auditors and to approve any significant non-audit relationship with the independent auditors;
- the requirement that listed foreign private issuers disclose any significant ways in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards; and
- the application of certain of the corporate governance standards to closed-end investment companies and exchange-traded funds.
The NYSE determined that closed-end investment companies would not be subject to most of the recommended corporate governance standards-with some exceptions involving audit committees and internal audit functions-because of their unique structure and operations, and because closed-end funds are already subject to detailed, substantive regulation under all of the major federal securities laws. The NYSE rule filing has been submitted to the SEC for approval, and the NYSE recommends that full compliance with the standards be required within 24 months of the date that the standards are approved by the SEC. The SEC will publish the rule filing for comment before considering its adoption.
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