by John R. Engen for Boardmember, April 2011.
It takes a village—boards, shareholders, and, yes, management—to foster truly effective corporate governance, not an array of rules and best practices. Proxy advisory firms should be scrutinized, and possibly regulated. Director independence, while important, might be just a tad overdone. Oh, and for all its warts and recent foibles, the U.S. corporate governance system actually works pretty well.
Those are a few of the more provocative conclusions of a blue-ribbon panel that last September issued a 32-page report on the state of governance in corporate America.
The Commission on Corporate Governance, sponsored by the New York Stock Exchange, included lawyers, academics, and representatives from some of the country’s biggest companies, brokerage firms, and institutional investors.
Its major task was to compile a list of 10 “principles of governance,” which was the central focus of the report. The principles are meant, in part, to offer up some informed discussion points where the various commission constituencies found common ground and hopefully spur debate—and possibly some policy changes.
“The underlying objective is to tell people who want to create more requirements that they should step back and not impose any more one-size-fits-all, check-the-box requirements,” says Stephen Lamb, a Wilmington, Delaware-based partner with Paul, Weiss, Rifkind, Wharton & Garrison and a commission member. “Those things don’t lead to effective governance.” (continue reading… )