BulletProofBlog the blog on crisis communications

Each week, Bulletproof Blog features exclusive interviews with thought leaders on issues of critical importance to companies and countries. This week, as public companies continue to deal with the effects of the global financial crisis, we interview Glenn Tyranski, Senior Vice President for Financial Compliance at the New York Stock Exchange (NYSE), who is responsible for the financial reviews of prospective and existing listed companies.

As an expert in the financial standards that NYSE listed companies must meet, Mr. Tyranski shared his insights on NYSE compliance with Bulletproof™:

Tell us about your role at the New York Stock Exchange. How does financial compliance and oversight impact companies listed on the exchange?

Glenn Tyranski: The NYSE has a series of standards that companies must maintain once they are listed. We have both financial standards and corporate governance standards.

We work with the senior executives of the companies, their outside advisors, and other regulatory bodies in performing our oversight responsibilities both in their initial listing on the NYSE and then their continued listing.

Companies value their NYSE listing and we recognize the power of that brand and the public's perception of what it means to be listed on the NYSE.  We serve investors by ensuring that only those companies qualified to list on the NYSE are first admitted and then only those in compliance or otherwise working through our compliance process remain listed.

When a company faces delisting from the NYSE, how do you evaluate a company’s ability to get back to minimum levels? Are there non-financial metrics that play into the exchange’s decision?

Glenn Tyranski: We have a series of quantitative continued listing standards that companies must maintain. These standards involve minimum share price, market capitalization, and, in certain cases, stockholders' equity and revenues depending on the original listing standard under which the company was first admitted.

Additionally, we have a series of qualitative assessments that are made based on information disclosed by companies in their periodic Securities and Exchange Commission (SEC) filings as well as in their news releases. These qualitative assessments include but are not limited to matters involving liquidity concerns, audit opinions, reduction in operating assets, bankruptcy or liquidation, abnormally low selling price, authoritative advice that a security is without value, unsatisfactory financial conditions, public policy concerns, disclosure deficiencies and governance matters.

We have the ability to monitor and screen the entire NYSE listed company base on a daily basis against quantitative metrics, and we are also sensitive to corporate disclosures of a qualitative nature. When companies reach certain financial levels, they are provided an early-warning notice describing what the standards are and how they operate if noncompliance is triggered in the future. We regularly dialogue with companies as a result of their corporate disclosures in order for us to properly assess the impact of the information released. While the NYSE can remove a company at any time when investor protection is a risk, for the most part, companies are provided a recovery period of anywhere from six months to 18 months to regain compliance.

Companies are asked to respond in writing and will often visit to present their recovery plans.  These recovery plans are often a mix of operational and strategic initiatives and involve budgeting, financing, capital raising, risk analyses, investor and shareholder communication plans, and possible acquisition and disposal activities.

Our involvement is often with the executives of the companies but will also involve board members and company advisors from the financial, legal, and investor relations departments.  Engaged board members along with the assistance of quality outside advisors, if necessary, will help shape a company's recovery efforts. Well crafted internal compliance oversight and risk assessment activities will also assist a company in restoring its NYSE compliance. The NYSE will work through the recovery plan with the company and if the plan is accepted by the NYSE, the company will be monitored closely against the milestones and goals outlined in its materials. If the company is able to accomplish its strategic and operational initiatives and see a restoration of their share price, market capitalization, or other measurements, then the company will be deemed to be back in compliance no later than the end of the prescribed plan period.

In your estimation, what were the top issues affecting public companies in 2009? Do you see these issues having the same impact in 2010?

Glenn Tyranski: Clearly, we have been living through challenging if not unprecedented times over the last 22 months. The NYSE's listed company community, while not immune to these difficult times, has remained steadfast. While we have experienced higher than historical rates of noncompliance during these turbulent times, the overall quality of the NYSE list continues to exceed that of other global markets. Early 2009 gave witness to dramatic decreases in share prices and the resultant market capitalization of many companies along with numerous going-concern issues often raised by distressed-debt situations and substantial write-offs and impairments. The professional care and due diligence performed by the NYSE's financial compliance staff assisted companies through these difficult periods while providing regulatory oversight to maintain the integrity of the NYSE's list.

As we begin 2010, we have continued to see the overall relative improvement in share price and market capitalization levels as compared to the depths of last March with a cautious and perhaps fragile confidence continuing to develop. While many challenges remain for companies to return to their previous positions in the capital markets, the NYSE recognizes the value of its brand to the companies themselves and to the investing public and remains vigilant in its oversight responsibilities.

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Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.