During the next several months, the committee, established in February, will reach out to a broad range of individuals representing investors, listed companies and members to hear their views. The committee will then report its additional recommendations to the board.
"The committee, at Dick Grasso's request, plans to step back and take a thorough and deliberate look at the Exchange's governance, with input from all constituents, and make whatever additional recommendations are appropriate," said H. Carl McCall, who co-chairs the committee with fellow director Leon E. Panetta. "At the same time, we quickly concurred with Dick that there were measures that the board could adopt immediately, that would be beneficial and clearly signal our commitment to significant and positive change."
Mr. Panetta added: "Even in our initial recommendations, we have tried to apply all of the principles that can build investor confidence: increasing transparency; enhancing independence; strengthening checks and balances; and addressing apparent or real conflicts of interest. In our work going forward, we will continue to look at every issue and situation with an eye toward furthering these goals."
"The board endorses the committee's recommendations as a swift, first step toward strengthening the Exchange's own governance," said NYSE Chairman and Chief Executive Officer Dick Grasso. "The panel's initial report is consistent with our over-arching principle of demanding the highest standards in our own governance, as we do of our listed companies. The board looks forward to the committee's continued exploration of how to transform our structure and practice to make them better reflect our unique obligation and commitment to the public interest."
Special Committee's 10 Initial Recommendations
Following are the Special Committee's initial recommendations:
- Revise the Compensation Committee charter to provide that only non-securities industry directors may serve as members of the committee.
- Publish in the Exchange's annual report a Compensation Committee report that includes the compensation of the directors, the chairman and the four other most highly paid officers.
- Prohibit service by NYSE senior officers on the boards of listed companies.To minimize disruption to listed companies on whose boards NYSE officers currently serve, these officers will be permitted to continue as board members until the respective companies' next annual shareholder meeting, at the latest, or until the companies can provide an earlier replacement.
- Separate the Audit and Finance Committee into two committees, and provide that only non-industry directors may serve as members of the Audit Committee.The Audit Committee must also comply with all of the applicable standards prescribed by the NYSE for listed-company audit committees.
- Establish a standing five-member Governance Committee responsible for the ongoing review of the governance of the NYSE.Three of the members must be non-industry directors (one of whom should chair the committee), and the other two are the two industry vice chairs of the NYSE.
- Require that the Committee for Review act by a majority of non-industry directors in overseeing the programs of the NYSE Regulatory Group.
- For purposes of allocating board committee assignments, the board cannot consider as a non-industry director any director who is the CEO of a bank holding company that has a broker-dealer subsidiary that does business with the public.
- Adopt and post on nyse.com written Governance Principles to formalize and establish these and other best practices, including the regular convening of executive sessions of the board in which the non-management directors meet without the management directors, with the chairman of the newly formed Governance Committee presiding.
- Codify the NYSE's current ethics requirements for NYSE directors, post the code on nyse.com, and promptly disclose any waivers of ethics requirements for directors or executive officers of the NYSE.
- Require that the board committee charters and membership of each committee be posted on nyse.com.
In addition to co-chairs Messrs. McCall and Panetta, the other Special Committee members include: Kenneth G. Langone, Peter N. Larson, Gerald M. Levin, Robert M. Murphy, Henry M. Paulson, Jr., and Lawrence W. Sonsini.
