by Scott Hirst for The Harvard Law School Forum, October 7th, 2010.
In the fall of 2009, the New York Stock Exchange formed a diverse and independent commission to examine core governance principles that could be widely supported by issuers, investors, directors, and other market participants. Chaired by Wilson Sonsini Goodrich & Rosati chairman Larry Sonsini, the NYSE Commission on Corporate Governance recently issued its final report, which was released by NYSE Euronext on September 23, 2010.
The report identifies 10 core governance principles covering such topics as the fundamental objectives of the board, management’s responsibility for governance, and the relationship between shareholders’ trading activities, voting decisions, and governance.
The principles outlined by the commission are a significant contribution to understanding the core duties and responsibilities of boards, management, and shareholders in the governance process, and provide an important framework outlining the common interests of these groups.
The 10 core principles contained in the report are as follows:
- The board’s fundamental objective should be to build long-term, sustainable growth in shareholder value for the corporation, and the board is accountable to shareholders for its performance in achieving this objective.
- Management has a critical role in establishing proper corporate governance, as it has primary responsibility for creating an environment in which a culture of performance with integrity can flourish.
- Shareholders have the right, the responsibility, and the long-term economic interest to vote their shares in a thoughtful manner, in recognition of the fact that voting decisions influence director behavior and conduct, and that voting is one of the primary means of communicating with companies on issues of concern. (continue reading… )