How much is too much?

The fallout of the Enron debacle spurred legislative and regulatory activity aimed at strengthening corporate governance and preventing another corporate implosion. Confronting shattered investor confidence, Congress responded to these corporate governance fiascos by enacting the now infamous Sarbanes-Oxley Act of 2002. The Securities and Exchange Commission (SEC), meanwhile, called on the self-regulatory organizations (SROs), specifically the New York Stock Exchange (NYSE) and Nasdaq, to re-examine and strengthen their own listing and corporate governance standards, in particular those related to the qualifications of directors and officers. In response, the SROs enacted comprehensive reforms to their corporate governance provisions, designed to “restore investor confidence by . . . ensuring the independence of directors and strengthening corporate-governance practices.”