The 10 biggest corporate governance developments in 2006 include backdating of executive stock options, the SEC's expanding executive compensation disclosure and hedge fund activism, according to Marco Consulting Group.
"Hopefully, the outrage over the burgeoning stock-option backdating scandal and the new disclosure rules enacted by the Securities and Exchange Commission will be an impetus for reform" of executive compensation, Ian W. Jones, Marco president, said in a statement. Also, "investors are not interested in micromanaging the intricacies of compensation plans but are seeking vehicles that will give them meaningful input on a company's approach to executive compensation."
The statement also noted that hedge funds "have become increasingly active shareholders," citing the high-profile hedge fund initiative at H.J. Heinz Co., which resulted in winning two seats on the board. But the "jury is still out on hedge fund activism," the statement said. The "effort to lift Heinz's performance ... will be carefully watched."