The settlement proposes more stringent changes than those spelled out in the Sarbanes-Oxley Act of 2002 and in tighter listing standards than those proposed by the New York Stock Exchange, according to a Reuters report.
Under the proposal, two-thirds of HCA’s board will be independent directors, the audit committee would be required to have at least two members with accounting or financial experience and the company will adopt more stringent standards about consulting relationships or hiring people who have done audit work for HCA than the NYSE or Sarbanes-Oxley provisions.
These requirements represent a departure from the NYSE mandated simple majority of independent directors. In addition, NYSE standards do not hold the board responsible for monitoring compliance, which the HCA settlement would.
The case was a consolidation of derivative lawsuits in October 1997 filed by several state pension plans on behalf of the company against certain Columbia/HCA directors and officials for breach of fiduciary duty, gross misconduct, mismanagement and corporate waste (See Public Funds Sue Columbia/HCA Hospital Chain). The settlement is subject to approval by the US District Court for the Middle District of Tennessee and the US Securities and Exchange Commission.