13 Oct. 2010 | Comments (0)
- June 13, 2010 – Nasdaq corporate governance listing requirements have been amended. Effective June 13, 2010, companies are to give prompt notification to Nasdaq after an executive officer of the company becomes aware of any noncompliance. Previously, the rule for notification was required for “material noncompliance” only.
- June 2010 – In the fall of 2009, the Nasdaq Listing and Hearing Review Council proposed a set of best practices designed to strengthen policies at listed companies. Comments were solicited, and 23 listed companies and 11 other parties responded. Subsequently and according to the Report of the NASDAQ Listing and Hearing Review Council on Corporate Governance, the practices will not be adopted at this time.
- Regular executive sessions of independent directors/fixed agendas: The Council believes that, except in exceptional circumstances, the additional time take for regularly holding executive sessions is well worth the benefit gained.
- Limit on the number of boards for directors: The Council encourages companies to integrate into their recruiting processes and orientations a clear declaration of the expectations and demands associated with board membership. To deal with “overboarded” directors, many respondents suggested boards should be willing to use their authority to remove ineffective members.
- Requiring continuing board member education: Most companies that responded to the solicitation were opposed to the concept of mandatory training, perceiving it as costly and a burden to experienced directors. The Council thinks it is important that boards dedicate time and resources to ensuring that directors have the requisite qualifications and knowledge, as well as training on governance issues and responsibilities.
- Shareholder vote for outside auditor: With recent rule changes, which have eliminated broker discretionary voting in uncontested director elections, inclusion of a vote on the auditor in the proxy can assist companies in obtaining a quorum for annual meetings.
- Shareholder communication with directors: The Council advocates board have some processes in place, such as proxy disclosure of such a process, board responses directly to shareholder communications, and participation by all directors at the annual meeting.
- Independent chair/lead director: The SEC disclosure rule regarding chair and CEO structure establishes the issue as an important one for boards and shareholders and requires a company to consider, explain and disclose its reasoning. The Council hopes this approach results in a thoughtful consideration and leadership structures that are finely tailored to each company.
- Classified boards/majority voting: Noting the anticipation that majority voting and annual elections of all directors may be required legislatively, the Council hopes that if such proposals are adopted they will include a degree of flexibility.