NYSE Committee’s Report Endorses Shareholder Approval of Stock Plans

Washington, DC, June 21, 2002 - A committee on corporate accountability and listing standards appointed by the New York Stock Exchange (NYSE) recently released a  report that makes a series of recommendations on enhancing the accountability, integrity, and transparency of NYSE-listed companies. Among the recommendations is a proposed requirement that all equity compensation plans be subject to shareholder approval. In a May  statement, the Institute urged the committee to consider stricter standards in this area in order to ensure that the interests of shareholders are protected in compensation matters.

The committee was appointed in response to recent ethics and control concerns at high-profile companies, and a request by SEC Chairman Harvey Pitt. Comments on the committee’s recommendations are due to the NYSE by July 20, 2002.

The recommendations include new standards and changes in corporate governance and disclosure practices of NYSE-listed companies. The report also makes certain recommendations to Congress and the SEC.

In addition to the equity compensation plan approval requirement, recommendations made by the committee address:

• the role and definition of independent directors,
• the creation of a corporate governance committee by all NYSE-listed companies,
• the creation of a compensation committee by all NYSE-listed companies,
• audit committee members’ compensation and responsibilities,
• the adoption and disclosure of a code of business conduct and ethics by all NYSE-listed companies,
• listed foreign private issuers’ disclosure requirements,
• CEO certification of an established set of procedures for verifying the accuracy and completeness of information provided to investors, and
• the introduction of an NYSE public reprimand letter, which could be issued to a company that has violated an NYSE listing standard.