Debate rages over US corporate governance plans
Wall Street proposals that corporate governance bodies, including audit, nominating and compensations committees be made up of only independent directors is creating furious debate across the pond.
The plan, announced by New York Stock Exchange chairman Richard Grasso, is aimed at cracking down on bad management and improve confidence in US corporations in the wake of Enron and other high-profile corporate disasters.
It also includes the proposal that a majority of board members be independent, and meet regularly without the presence of the company.
Influential lobby group, the Business Roundtable – made of chief executives of large US companies – slammed the proposals. They said the moves would be too expensive and put NYSE-listed companies at a disadvantage.
But chief financial watchdog, the US Securities & Exchange Commission said the proposal was ‘an important first step’.
If the plans are accepted, as many a one-in-four NYSE-listed companies could be in violation of the new rules.