"The steps we have taken today will strengthen accountability and improve transparency, and they underscore our commitment to maintaining a marketplace with the highest levels of integrity as its foundation," said Salvatore F. Sodano, Amex Chairman and Chief Executive Officer. "At the same time, these measures acknowledge the diversity of companies that drive economic growth, innovation and employment."
The measures passed by the Amex Board of Governors include:
- Increasing the independence of boards of directors of Amex-listed companies and tightening the definition of "independent."
- Requiring that audit committees be chaired by a person with sophisticated financial experience. The full board, including a majority of the independent board members, must formally approve the hiring and firing of outside auditors. Amex already requires that audit committees be majority-independent.
- Requiring that audit committees approve all related party transactions entered into by the company.
- Requiring shareholder approval of all stock option plans in which officers and directors participate.
- Mandating timely public disclosure of board changes and vacancies and "going concern" opinions. The Amex will require that companies who receive warnings about violations of corporate governance requirements publicly disclose the warning.
- Requiring that Amex-listed companies hold at least quarterly board and audit committee meetings.
- Requiring all Amex-listed companies to adopt a code of ethics and implement a compliance program that would include reporting to the audit committee.
- Prohibiting any American Stock Exchange employee or floor member from serving on the board of any Amex-listed company. The Amex, as one of the primary regulators of capital markets, will take every step to eliminate any potential conflicts of interest in carrying out its regulatory responsibilities.
Mr. Sodano noted that small and middle market companies - which comprise the Amex's core constituency - are the principal source of new job creation for the economy, and often are the incubators of innovation providing the foundation for future economic growth. In cautioning against a "one size fits all" solution, he noted that applying a single set of rules across the broad spectrum of public companies was unrealistic and threatened fair access to the capital markets for emerging companies in critical stages of their growth and development. He reiterated that Amex's final rules would provide the appropriate balance between strong investor protection and transparency, along with a marketplace that encouraged innovation.
"As regulators, our commitment to the highest standards of integrity and ethics must be clear and unequivocal," said Mr. Sodano. "And as guardians of the capital markets - the very front line of the economy - we must also ensure that we do not stifle the innovation that will drive future economic growth for generations to come."
