New proposals map course for better board governance, accountability

Rule changes recently recommended by the Nasdaq Stock Market and a key committee of the New York Stock Exchange-- designed to strengthen corporate governance and restore investor confidence-present a number of significant considerations for banking institutions of all charter types and sizes, not

In June, Nasdaq's board submitted changes for final approval to the U.S. Securities and Exchange Commission that address director independence and compensation, board committee operations, governance procedures, and codes of business conduct and ethics. Separately, NYSE's Corporate Accountability and Listing Standards Committee suggested action to be considered by NYSE's board on Aug. 1. SEC Chairman Harvey L. Pitt had asked the two groups in February to "rethink their listing agreements."

Nasdaq actions. The changes Nasdaq has submitted to the SEC would tighten the definition of an independent director to prohibit a board member or any family member from receiving any payments of more than $60,000 from the firm served. Under the current definition, a $60,000 limit applies only to compensation paid directly to the board member. Also, a director would not be considered independent if the listed firm made payments to a charity of which the director is an executive officer and the payments exceeded the greater of $200,000 or 5 percent of the firm's or charity's gross revenues.