1. Most Discussed
  2. Gainers & Losers

BRW ... report by Neil Shoebridge

  1. rembrandt

    5,816 Posts.

    Hmmm... BRW Daily

    "Getting tough on boards
    By Neil Shoebridge, managing editor
    Friday, June 7, 2002

    As the controversy surrounding corporate governance, accounting standards, auditing and so on rolls on here and in the United States, the New York Stock Exchange (NYSE) has released a set of rules designed to restore investor confidence in the aftermath of the collapse of Enron Corporation and the problems that have swamped other companies this year. Australian regulators, companies and investors should study the new rules, which represent a significant step forward in corporate governance.

    Responding to a request from the United States Securities and Exchange Commission to review its listing standards, the NYSE has created new rules that move power away from management and into the hands of independent directors.

    In Australia, recent difficulties at companies such as Mayne Group - and the revelations emerging from the HIH Insurance royal commission on how the board of FAI Insurance operated - highlight the problem of having a board dominated by senior management. The US has experienced similar problems, and the NYSE believes it has come up with a solution.

    "There are periodic moments of madness," Richard Grasso, the chairman of the NYSE, told The Washington Post overnight. "But bad people and bad practices will be rid from the system and we will return to the norm."

    The proposed new rules include:

    * Independent directors must account for the majority of directors on the boards of the 3000 companies listed on the NYSE.

    * Independent directors must be the only members of a company's audit and compensation committees.

    * Companies must allow shareholders to vote on any stock option compensation plans.

    The NYSE would have three levels of punishment for companies that do not introduce the changes: a formal letter of reprimand, a suspension from trading, and explusion from the exchange.

    The new rules are open for public comment for two months. They will be amended after the two-month review period and then voted on by the NYSE's board. After the new rules are introduced, companies will have two years to comply, but the NYSE hopes that they will start making changes immediately to please their investors. The NYSE estimates that at least 40% of the companies on its board do not comply with the proposed new rules."

    This is only my view ... read the red stuff.

Before making any financial decisions based on what you read, always consult an advisor or expert.

The HotCopper website is operated by Report Card Pty Ltd. Any information posted on the website has been prepared without taking into account your objectives, financial situation or needs and as such, you should before acting on the information or advice, consider the appropriateness of the information or advice in relation to your objectives, financial situation or needs. Please be aware that any information posted on this site should not be considered to be financial product advice.

From time to time comments aimed at manipulating other investors may appear on these forums. Posters may post overly optimistic or pessimistic comments on particular stocks, in an attempt to influence other investors. It is not possible for management to moderate all posts so some misleading and inaccurate posts may still appear on these forums. If you do have serious concerns with a post or posts you should report a Terms of Use Violation (TOU) on the link above. Unless specifically stated persons posting on this site are NOT investment advisors and do NOT hold the necessary licence, or have any formal training, to give investment advice.


Thank you for visiting HotCopper

We have detected that you are running ad blocking software.

HotCopper relies on revenue generated from advertisers. Kindly disable your ad blocking software to return to the HotCopper website.

I understand, I have disabled my ad blocker. Let me in!

Need help? Click here for support.