Although generally consistent with the recently launched company/investor coalition Commonsense Principles of Corporate Governance (reported on here) where the two sets of guidance overlap - notably, the Business Roundtable's newly released updated Principles of Corporate Governance (last updated in 2012) specifically reject the notion of director/director nominee third-party compensation arrangements (as opposed to advocating a disclosure-only approach as is the case with Nasdaq's new golden leash disclosure rule); specifically reject director meeting fees in favor of annual retainers to reflect the ongoing commitment of board service; and advise "meaningful and effective limitations" on director equity compensation via shareholder-approved plans.
Also particularly noteworthy are the Principles' emphasis on investors' responsibility and accountability for long-term value creation coincident with their quest for increasing influence on corporate decision-making, and rejection of investors' use of the proxy process to pursue social and political agendas:
Business Roundtable CEOs believe that shareholder engagement will continue to be a critical corporate governance issue for U.S. companies in the years to come. Further, it is our sense that there is a growing recognition in corporate America that an increase in shareholder access to the boardroom cannot come without a corresponding increase in shareholder responsibility. Here, as in many areas of corporate governance, transparency is a basic but essential element — for example, in this “age of information,” a shareholder that wishes to influence corporate behavior should be encouraged to publicly disclose the nature of its identity and ownership, even in cases where the federal securities laws may not specifically require disclosure.
More fundamentally, we believe that the responsibility of shareholders extends beyond disclosure. We sense that there is a rising belief that shareholders cannot seek additional empowerment without assuming some accountability for the goal of long-term value creation for all shareholders. Moreover, we believe that shareholders should not use their investments in U.S. public companies for purposes that are not in keeping with the purposes of for-profit public enterprises, including but not limited to the advancement of personal or social agendas unrelated and/or immaterial to the company’s business strategy.
We believe that this concept of shareholder responsibility and accountability will — and should — become an integral part of modern thinking relating to corporate governance in the coming years, and we look forward to taking a leadership role in discussions relating to these important issues.
The Principles otherwise support the board's retention of flexibility and discretion as to board leadership, refreshment-related policies (e.g., age, tenure), capital allocation, and board practices generally - as opposed to a one-size-fits-all approach; promote ongoing shareholder engagement; serve as a good refresher on board and committee structure and composition and the ordinary course allocation of responsibilities among and between the board and management; and reiterate the board's duty to act in the long-term best interests of the company and all of its shareholders rather than a select, more vocal few.
See the Business Roundtable's release, and additional resources on our Board Practices, Director Duties & Liabilities, Director Compensation, Executive Pay, and Institutional Investors topical pages.