For the protection of investors, Nasdaq believes in setting stringent standards for a company's employees, officers and directors. Implicit in this philosophy is the importance of sound corporate governance. As a listing venue for public companies, Nasdaq is committed to helping board members of our listed companies understand their governance responsibilities. We are partnering with experts to provide opportunities for directors to receive relevant continuing education. One such initiative is an alliance with the National Association of Corporate Directors (NACD) to provide corporate governance educational services to Nasdaq companies.
Nasdaq actively works with policy makers and business associations to support corporate governance policies that encourage exceptional standards without hindering the legitimate management of a company, the process of capital formation and does not unduly open companies to frivolous lawsuits or special interests. The needs of both short-term and long-term shareholders should be balanced by all policy decisions in this area.
Proxy Access: On August 25, 2010, the SEC promulgated final rules giving a shareholder, or group of shareholders who has held 3% of stock for 3 years, access to the company’s proxy materials to nominate a director. This rule allows those qualifying shareholders to place their nominees in the company’s proxy statement and on the company’s proxy card. Nasdaq is concerned that the proposed ownership levels for large accelerated filers and accelerated filers are too low and would allow, and even encourage, special interest groups to aggregate their shares to pursue their own narrow agendas, rather than the creation of long-term shareholder value, resulting in an increase in the number of costly, distracting proxy contests by holders whose interests are not aligned with most shareholders. Most recently, the Chamber of Commerce and Business Roundtable, of which Nasdaq is a member, sued and forced the SEC to stay its decision on this issue. The legal grounds for challenging the rules are that they are arbitrary and capricious in violation of the Administrative Procedure Act, and the SEC has failed to properly assess the rules’ effects on “efficiency, competition and capital formation” as required by law.