by Gary Larkin for The Conference Board – Governance Center Blog, May 19th, 2011.
With proxy season in full gear, a myriad of corporate governance issues once again is front and center at many annual meetings. Whether it’s board structure, diversity, corporate social responsibility, executive compensation or shareholder dialogue, these issues are either included in shareholder resolutions or have become disclosures in the proxy statement.
What better way to truly enjoy the proxy season than with some light reading on those issues and what it all means for boards and everyone else in the corporate governance space. In the past couple of weeks, I have been reading some meaningful commentaries and corporate governance reports about the 2011 season. One is a commentary from a well-known New York law firm on how to achieve “truly good corporate governance.” Another is a report from a blue ribbon panel on the future of corporate boards. And two others are the annual corporate governance reports from two important institutional investors.
Although it’s a bit early for summer reading, I thought it’s never too early for important corporate governance reading especially in the middle of proxy season. Here are the four aforementioned publications that I believe are worth reading …
- A 12-Step Program to Truly Good Corporate Governance, Latham & Watkins, Corporate Governance Commentary, May 2011. Summary: With apologies to the addiction recovery plan by the same name, this commentary lays out 12 specific steps boards should take to strive for good corporate governance. It states: “Good corporate governance is an admirable, but elusive, goal. Everyone is in favor of it, but there is far from universal agreement about what it is and how to get there.” Some of the steps focus on enhancing value creation for shareholders, affirming the board’s primary role as a strategic adviser, limiting the board’s size to enhance its effectiveness, and selecting board nominees based on their key competencies. The final step Latham & Watkins stresses is to “recognize that investors voting with their feet is a far more efficient discipline for corporate managers than corporate governance theories, which are unproven as generators of economic value.” It concludes that Truly good corporate governance is about the complex of relationships of the people who lead the enterprise and the systems and policies that influence their behavior. What it does not resemble is a set of rigid rules derived from inept analogies to political models or to different types of legal relationships, such as the laws of tangible and intangible property or agency. (continue reading… )