The NYSE proposal, along with proposals from the American Stock Exchange and Nasdaq stock market now move onto the Securities and Exchange Commission (SEC) where members of the public will have an opportunity to make comments.
Since the SEC first asked the stock markets to come up with new governance standards earlier this year, the Bush administration and big business have shifted their position towards more radical reform, in the light of scandals at WorldCom, Tyco, Adelphia and others.
The NYSE standards include requirements for:
- a majority of the board to be independent;
- non-executive directors to hold regular meetings separately from management; and
- shareholders to vote on all stock-option plans.
Listed foreign companies do not have to comply with all the measures, but they “must disclose any significant ways in which their corporate governance practices differ from NYSE rules”.
In a change to the earlier draft, the stock exchange also exempted companies in which a majority stake is held by an individual or group from the board independence criterion. But the NYSE said such companies’ audit committees would still have to have a minimum of three independent directors.