Below is a summary of the NYSE corporate governance requirements of companies listed on this stock exchange. For each requirement, state how it is intended to help to address the risk of fraud in publicly traded organizations.
a. Boards need to consist of a majority of independent directors.
b. Boards need to hold regular executive sessions of independent directors without management present.
c. Boards must have a nominating/corporate governance committee composed entirely of independent directors.
d. The nominating/corporate governance committee must have a written charter that addresses the committee’s purpose and responsibilities, and there must be an annual performance evaluation of the committee.
e. Boards must have a compensation committee composed entirely of independent directors.
f. The compensation committee must have a written charter that addresses the committee’s purpose and responsibilities, which must include (at a minimum) the responsibility to review and approve corporate goals relevant to CEO compensation, make recommendations to the Board about nonCEO compensation and incentive-based compensation plans, and produce a report on executive compensation; there must also be an annual performance evaluation of the committee.
g. Boards must have an audit committee with a minimum of three independent members.
h. The audit committee must have a written charter that addresses the committee’s purpose and responsibilities, and the committee must produce an audit committee report; there must also be an annual performance evaluation of the committee.
i. Companies must adopt and disclose corporate governance guidelines addressing director qualification standards, director responsibilities, director access to management and independent advisors, director compensation, director continuing education, management succession, and an annual performance evaluation of the Board.
j. Companies must adopt and disclose a code of business conduct and ethics for directors, officers, and employees.
k. Foreign companies must disclose how their corporate governance practices differ from those followed by domestic companies
l. CEOs need to provide an annual certification of compliance with corporate governance standards.
m. Companies must have an internal audit function, whether housed internally or outsourced.