http://www.sec.gov/rules/final/2009/33-9089.pdf Link provided by Milestone (Tks)

C. New Disclosure about Board Leadership Structure and the Board’s Role in Risk Oversight (p39-44)

3. Final Rule

After consideration of the comments, we are adopting the proposals substantially as proposed with a few technical revisions in response to comments. We believe that, in making voting and investment decisions, investors should be provided with meaningful information about the corporate governance practices of companies.129 As we noted in the Proposing Release, one important aspect of a company’s corporate governance practices is its board’s leadership structure. Disclosure of a company’s board leadership structure and the reasons the company believes that its board leadership structure is appropriate will increase the transparency for investors as to how the board functions.

As stated above, the amendments were designed to provide shareholders with disclosure of, executive officer, the board chairman position and, where applicable, the lead independent director position. We agree with commenters that the phrase “board leadership structure” instead of “company leadership structure” would avoid potential misunderstanding that the amendments require a discussion of the structure of a company’s management leadership.130 We also agree with commenters that the phrase “risk oversight” instead of “risk management” would be more appropriate in describing the board’s responsibilities in this area.131

Under the amendments, a company is required to disclose whether and why it has chosen to combine or separate the principal executive officer and board chairman positions, and the reasons why the company believes that this board leadership structure is the most appropriate structure for the company at the time of the filing. In addition, in some companies the role of principal executive officer and board chairman are combined, and a lead independent director is designated to chair meetings of the independent directors. In these circumstances, the amendments will require disclosure of whether and why the company has a lead independent director, as well as the specific role the lead independent director plays in the leadership of the company. As we previously stated in the Proposing Release, these amendments are intended to provide investors with more transparency about the company's corporate governance, but are not intended to influence a company’s decision regarding its board leadership structure.

The final rules also require companies to describe the board’s role in the oversight of risk. We were persuaded by commenters who noted that risk oversight is a key competence of the board, and that additional disclosures would improve investor and shareholder understanding of

the role of the board in the organization’s risk management practices.132 Companies face a variety of risks, including credit risk, liquidity risk, and operational risk. As we noted in the Proposing Release, similar to disclosure about the leadership structure of a board, disclosure about the board’s involvement in the oversight of the risk management process should provide important information to investors about how a company perceives the role of its board and the relationship between the board and senior management in managing the material risks facing the company. This disclosure requirement gives companies the flexibility to describe how the board administers its risk oversight function, such as through the whole board, or through a separate risk committee or the audit committee, for example. Where relevant, companies may want to address whether the individuals who supervise the day-to-day risk management responsibilities report directly to the board as a whole or to a board committee or how the board or committee otherwise receives information from such individuals.