Corporate Eye

Two Companies Ahead Of The Corporate Governance Curve

Corporate Governance is getting lots of attention. 

The National Association of Corporate Directors in October issued Key Agreed Principles (PDF) to Strengthen Corporate Governance for U.S. Publicly Traded Companies and stated —

The current economic crisis has eroded public and investor confidence in corporate governance. American corporations must take action to restore the public trust. For the past year, we have worked with business leaders and shareholder groups to create the attached set of Principles to serve as a framework for strengthening governance for U.S. publicly traded companies.

Our Agreed Principles are intended to provide a blueprint to you and thereby to help improve the quality of discussion and debate about governance issues moving forward.

Yale’s Millstein Center for Corporate Governance and Performance published itsTalking Governance: Board-Shareowner Communications on Executive Compensation (PDF) indicating —

Through this report the Millstein Center, supported by Deloitte & Touche LLP1, sought to explore the constraints, risks, benefits and sustained commitments by investors and boards to engage one another in substantive dialogue.

The Shareholder Communications Coalition published Views On Shareholder Communications (PDF) 

The time has come for the U.S. Securities and Exchange Commission (‘SEC’) to conduct a comprehensive evaluation of the existing shareholder communications system, which is cumbersome, circuitous, and overly expensive. New regulatory requirements and increasing shareholder activism have elevated the need for public companies to communicate more effectively with their shareholders. Moreover, advances in technology not only provide the opportunity for enhanced communication and efficiency in the proxy process, but also facilitate the decoupling of shareholder voting rights from shareholder economic interests. These developments must be addressed to protect the integrity of our corporate governance system.

The common elements are transparency, proxy information and communications.

Yet there are some standout companies that are already applying the suggestions mentioned by these organizations.

For example Manulife Financial in its proxy statement displays an innovative Board Matrix that outlines Director skills. This contributes to transparency and communications.

Manulife also does a good job of communicating its Vision and Values in text and a video.

Sun Life

Another noteworthy company is Sun Life. In their proxy they do a great job of displaying Board member profiles.

Notice how shares, options owned, committee membership and attendance and board memberships in other companies are displayed. 

I commend Manulife and Sun Life for their forthright communications with shareholders.

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Ed Konczal has an MBA from New York University's Stern School of Business (with distinction). He has spent the last 10 years as an executive consultant focusing on human resources, leadership, market research, and business planning. Ed has over 10 years of top-level experience from AT&T in the areas of new ventures and business planning. He is co-author of the book "Simple Stories for Leadership Insight," published by University Press of America.