Corporates listed on the NYSE are bracing themselves for fresh governance rulings passed by the beleagured stock exchange in the wake of CEO Dick Grasso's resignation in September. The rulings have been approved by the SEC.
The rules relate to the independence of directors, offering a more detailed definition of independence to be adhered to by the majority of board members. Compensation, auditing, the nomination of directors and corporate governance are all issues that require fresh provision by independent directors.
William Donaldson, SEC chairman said: "These rule changes are at the core of a broad movement by our markets to enhance the corporate governance practices of the companies traded on them and I congratulate the NYSE for their efforts," he says.
A $140 million pay package for Grasso prompted uproar in New York's investor community as the markets took a decidedly dim view of the NYSE compensation policy. If the NYSE cannot adequately govern its own directors, the institutional investors reasoned, how could it be expected to govern their corporate members?
"Investors will recognise significant benefits from these actions today and long in to the future," adds Donaldson.