ICI Supports Amex Proposal to Enhance the Independence of Listed Companies' Boards of Directors, November 2003

Washington, DC, November 21, 2003 - The Institute supports a recent American Stock Exchange proposal that would enhance board independence and increase the role of independent directors on board committees for companies listed on Amex.

Background
The SEC solicited comments on the Amex proposal and simultaneously approved that proposal on an accelerated basis earlier this month. The Amex rules are very similar to analogous provisions in NYSE and Nasdaq rules.

have a majority of independent directors;
comply with the audit committee requirements of Rule 10A-3 under the Exchange Act, including requirements regarding the independence of audit committee members, procedures for the receipt of concerns regarding questionable accounting matters from employees of the issuer, authority to engage advisers; and funding of the audit committee;
have their boards of directors meet at least quarterly and independent directors would be required to meet at least annually in executive session outside the presence of non-independent directors;
adopt a code of conduct and ethics, applicable to all directors, officers, and employees, that complies with the definition of "code of ethics" as set forth in Item 406 of Regulation S-K.

The Amex proposal also states that company directors generally would be required to be nominated either by a majority of independent directors or a nomination committee comprised solely of independent directors. Compensation of a company's chief executive officer generally would be required to be determined by either a majority of independent directors or a compensation committee comprised solely of independent directors.

ICI Position
In a recent comment letter, the Institute commends Amex for taking this initiative to improve corporate governance by enhancing the role of independent directors and strengthening the oversight responsibilities of audit committees. The Institute supports the proposal and believes that it will serve to enhance the interests of investors by improving the governance structure of listed companies and the integrity of financial reporting.

The Institute is also pleased that the provisions of the Amex proposal are very similar to provisions in the NYSE and Nasdaq rules. Such a coordinated approach ensures that the self-regulatory organizations do not compete on the basis of differences in their rules, encouraging a "race to the bottom" to attract new listings, to the ultimate detriment of investors.