Peter Clapman, TIAA-CREF senior vice president and chief counsel for corporate governance, urged Congress to consider a wide range of changes in the management, oversight and regulation of companies. Testifying today before a House subcommittee, Mr. Clapman said the New York Stock Exchange and Nasdaq "must impose stronger standards for director independence and education, shareholder approval for all material equity plans and policies that seek out conflicts of interest.
"Not all individuals are qualified to be directors in todays complex marketplace simply because they are asked to serve. Audit committee directors only recently had to meet a standard of financial literacy literally the ability to understand a financial statement, he said.
Companies should be required to reflect the cost of stock options in their financial statements, and shareholders should approve dilutive stock option plans, he said. "Stock options are overused and abused with the accounting rules largely to blame, he testified. "The true costs of fixed price options escape the earning statement and obscure, rather than provide, full financial statement disclosure.
Mr. Clapman appeared before the House Financial Services Committee Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.