Under the Corporate Governance Rules of the New York Stock Exchange, Elan Corporation, plc (“Elan”) is required to disclose any significant ways in which its corporate governance practices differ from those required to be followed by domestic companies under NYSE listing standards.
Under Section 303A of the NYSE Listed Company Manual, Elan may, in general, follow Irish corporate governance practices in lieu of most of the NYSE corporate governance requirements. However, Elan is required to comply with NYSE Sections 303A.06, 303A.11, 303A.12(b) and 303A.12(c).
The following table contains a summary of Elan’s corporate governance practices and those required of domestic companies under NYSE listing standards. There are no significant differences between Elan’s corporate governance practices and those required of domestic companies under NYSE listing standards.
| NYSE Standards for US Listed Companies under Listed Company Manual Section 303A | Elan Corporate Governance Practices |
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NYSE Section 303A.01
A NYSE-listed company must have a majority of independent directors on its board of directors. |
Two-thirds of the members of Elan’s board of directors are independent directors.
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NYSE Section 303A.02
NYSE Section 303A.02 establishes general standards to evaluate directors’ independence. |
Elan has adopted the definition of “independent director” under NYSE Section 303A.02, as described in Elan’s Corporate Governance Guide-lines.
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NYSE Section 303A.03
Non-management directors must meet at regularly scheduled executive meetings not attended by management. |
Elan’s Corporate Governance Guidelines provide that “[t]he non-management directors of the board will meet without management at regularly scheduled executive sessions, and at such other times as they deem appropriate, under the chairmanship of the Lead Independent Director.”
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NYSE Section 303A.04
US listed companies must have a nominating/corporate governance committee comprised entirely of independent directors. The committee must have a written charter establishing certain minimum responsibilities as set forth in NYSE Section 303A.04(b)(i) and providing for an annual evaluation of the committee’s performance. |
Elan’s board of directors maintains a Nominating Committee composed entirely of independent directors. The Nominating Committee has a written charter which, among other things, meets the requirements set forth in NYSE Section 303A.04(b)(i) and provides for an annual evaluation of the Nominating Committee’s performance.
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NYSE Section 303A.05
US listed companies must have a compensation committee comprised entirely of independent directors. The committee must have a written charter establishing certain minimum responsibilities as set forth in NYSE Section 303A.05(b)(i) and providing for an annual evaluation of the committee’s performance. |
Elan’s board of directors maintains a Compensation Committee composed entirely of independent directors. The Compensation Committee has a written charter which, among other things, meets the requirements set forth in NYSE Section 303A.05 (b)(i) (except that the Compensation Committee’s report set forth in Elan’s annual report is based on Irish rules and regulations rather than the SEC proxy rules) and provides for an annual evaluation of the Compensation Committee’s performance.
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NYSE Section 303A.06
US listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 (the “Exchange Act”). Foreign private issuers must satisfy the requirements of Rule 10A-3 under the Exchange Act by July 31, 2005. |
Elan’s board of directors maintains an Audit Committee that meets the requirements of Rule 10A-3 of the Exchange Act.
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NYSE Section 303A.07
The audit committee must consist of at least three members, all of whom must be independent under NYSE Section 303A.02 and be financially literate or must acquire such financial knowledge within a reasonable period. At least one member must have experience in accounting or financial administration. The committee must have a written charter establishing certain minimum responsibilities as set forth in NYSE Section 303A.07(c)(iii) and providing for an annual evaluation of the committee’s performance. |
Elan’s Audit Committee is comprised of no fewer than three directors, each of whom is an independent director under NYSE Section 303A.02 and each member of the Audit Committee meets all applicable financial literacy requirements.
The Audit Committee has a written charter which meets the requirements set forth in NYSE Section 303A.07(c)(iii) and which provides for an annual evaluation of the Audit Committee’s performance. |
NYSE Section 303A.07(d)
Each US listed company must have an internal audit function in order to provide to management and to the audit committee permanent assessments on the company’s risk management processes and internal control system. |
To support our system of internal control, we have separate Corporate Compliance, Internal Audit and Internal Control Departments. Each of these departments report periodically to the Audit Committee.
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NYSE Section 303A.08
Shareholders must be given the opportunity to vote on all equity based compensation plans and material revisions thereto with certain exceptions. |
Under Section 13.13 of the Listing Rules of the Irish Stock Exchange, in general, all employee share plans that contemplate the issuance of new shares must, with certain limited exceptions, be approved by Elan’s shareholders prior to their adoption.
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NYSE Section 303A.09
US listed companies must adopt and disclose corporate governance guidelines, including several issues for which such reporting is mandatory, and include such information on the company’s website, which should also include the charters of the audit committee, the nominating committee, and the compensation committee. In addition, the board of directors must make a self-assessment of its performance at least once a year to determine if it or its committees function effectively and report thereon. |
Elan has adopted Corporate Governance Guidelines which, together with the charters of the Audit Committee, the Nominating Committee and the Compensation Committee, are published on the Company’s website.
Elan’s Corporate Governance Guidelines require that Elan’s board of directors conduct a self-assessment at least annually to determine whether the board of directors or its committees function effectively. |
NYSE Section 303A.10
US listed companies must adopt a Code of Business Conduct and Ethics for directors, officers and employees. |
Elan has adopted a Code of Conduct for directors, officers and employees which is published on the Company’s website.
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NYSE Section 303A.12
The CEO of each listed US company must, on a yearly basis, certify to the NYSE that he or she knows of no violation by the company of NYSE rules relating to corporate governance. The CEO must notify the NYSE in writing whenever any executive officer of the company becomes aware of any substantial non-fulfillment of any applicable provision under NYSE Section 303A. Finally, each US listed company must submit an executed Written Affirmation annually to the NYSE and Interim Written Affirmation each time a change occurs in the board or any of the committees subject to NYSE Section 303A. |
Elan’s CEO will notify the NYSE in writing whenever any executive officer of the company becomes aware of any substantial non-fulfillment of any applicable provision under NYSE Section 303A. In addition, Elan will comply with the NYSE’s rules relating to the submission of annual and interim affirmations.
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