American Stock Exchange News Release

Exchange Release September 13, 2002
Media Contact: Jennifer Olegario, Amex
Amex-listed Companies: John Tubman, Amex
Legal Inquiries or Further Information: Claudia Crowley, Amex


New York -  The American Stock Exchange (Amex) Board of Governors formally approved enhanced rules that will increase disclosure requirements, strengthen board oversight and audit committee responsibility, and provide for increased shareholder rights for its listed companies.

"As a guardian of capital markets and proponent of innovation, our goal is to establish rules that ensure accountability, transparency and oversight while also recognizing the importance of the diversity and critical needs of companies at different stages of development," said Amex Chairman and CEO Salvatore F. Sodano. "The Amex has always been a regulator that is focused not only on strong regulation, but also focused on enhancing prospects for current and future economic prosperity."

The following measures have been approved by the Amex Board of Governors:

Ethics and Disclosure

  • Amex employees and floor members are prohibited from serving on the board of any Amex-listed company.
  • Each Amex-listed company must adopt and disclose a code of ethics and compliance program.
  • Each foreign Amex issuer must include summary disclosure regarding any material differences between home country corporate governance practices and Amex requirements in its annual proxy statement
  • Amex-listed companies will be required to make timely public disclosure of board changes and vacancies and auditor "going concern" opinions.

    Stock Options

  • Amex-listed companies must obtain shareholder approval of all stock option plans subject to limited exceptions, and brokers will not be permitted to vote their customers' shares on stock option plan proposals without instructions from the customer.

    Board of Director Independence and Other Requirements

  • Amex-listed companies must have boards comprised of a majority of independent directors, except for "controlled" companies and small business filers.
  • The definition of "independent" will be tightened and the board of each listed company will be required to evaluate any relationship between a director and the company and make an affirmative determination that such relationship does not preclude a determination that the director is independent. Audit committee members will only be permitted to receive such fees from the listed company as are permitted by SEC rules pursuant to the Sarbanes Act.
  • Amex-listed companies must hold board meetings on at least a quarterly basis.
  • Independent directors must meet as often as necessary to fulfill their responsibilities, including in executive session without the presence of non-independent directors and management at least annually.
  • Boards of Amex-listed companies may not be classified into more than three classes of directors, and each director's term of office may not exceed three years.

    Audit Committees

  • Audit committee requirements will be conformed to the provisions and requirements of the Sarbanes Act.
  • Audit committee chairs of Amex-listed companies must be financially sophisticated and all members of the audit committee must be financially literate at the time of appointment.
  • Amex-listed company audit committees must be responsible for selecting the independent auditor and must meet privately with the independent auditor.
  • Audit committees of Amex-listed companies must have the authority and funding to engage independent counsel and other advisors in appropriate circumstances.
  • Amex-listed companies must hold audit committee meetings on at least a quarterly basis.
  • The time that a non-independent director may serve on an Amex-listed company audit committee pursuant to the "exceptional and limited circumstances" exception will be limited to two years, and such director may not serve as chair of the committee.
  • Audit committee and board composition requirements applicable to Small Business filers will be increased.
  • All related party transactions entered into by Amex-listed companies must be subject to oversight by the audit committee.

    Compensation and Nominating Committees

  • CEO compensation must be approved by a compensation committee composed entirely of independent directors or by a majority of the independent directors on an Amex-listed company board (except for "controlled" companies). Other executive compensation must be subject to review by the compensation committee (or a majority of the independent directors) in consultation with the CEO, which will be responsible for making a recommendation to the board.
  • Board nominations must be approved by a nominating committee composed entirely of independent directors or by a majority of the independent directors on an Amex-listed company board (except for "controlled" companies and nominations which are legally required by contract or otherwise).


  • The Amex staff is authorized to issue a "warning letter" to a listed company for a minor corporate governance violation. Amex-listed companies will be required to make timely public disclosure of board changes and vacancies and auditor "going concern" opinions.
  • It is anticipated that the requirements applicable to board and audit committee composition would become effective two years following the SEC approval of the proposed rule change, unless earlier implementation is otherwise required by SEC rules adopted pursuant to the Sarbanes Act. The other proposed changes would generally become effective within six months of SEC approval, or in the case of the disclosure requirements, sanctions and Amex employee prohibitions, immediately.

    "These new rules further strengthen a marketplace whose foundation is built on integrity," continued Sodano. "Our enhanced rules strike the appropriate balance between strong investor protection and transparency, along with a marketplace that encourages innovation and agility."

    The enhancements approved by the Amex Board of Governors will be presented to the SEC and are subject to review and approval.

  • The American Stock Exchange® (Amex®) is the only primary exchange that offers trading across a full range of equities, options and exchange traded funds (ETFs), including structured products and HOLDRSSM. In addition to its role as a national equities market, the Amex is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 121 ETFs to date. The Amex is also the second largest options exchange in the U.S., trading options on broad-based and sector indexes as well as domestic and foreign stocks. For more information, contact the Media Contact above.