A group of leaders from five corporations, six investment management companies, one asset owner and one hedge fund activist on Thursday jointly released a set of corporate governance principles, endorsing majority vote to elect directors and rejecting dual-class share voting.
The group took no position on proxy access to enable shareholders to use corporate proxy statements to nominate directors.
The group, which met in secret, developed the principles, which cover eight areas, as a framework for “sound long-term-oriented governance” and to “accelerate” discussion on the issue, according to the group’s news release and the principles.
The principles cover boards of directors and responsibilities and leadership, including board composition, compensation, tenure and communications with shareholders.
Other principles include shareholder rights, public reporting, management compensation and succession planning.
The principles include a set for asset managers’ role in corporate governance. It calls for asset owners to share voting intentions with corporations, especially when in opposition, “to facilitate a robust dialogue if they believe that doing so is in the best interest of their clients.”
On proxy access, the principles give only a description of the current landscape without taking any position.
The group, all of whose members singed off on the principles, includes Warren Buffett; as well as lead executives from the C$278.9 billion ($213.8 billion) Canada Pension Plan Investment Board, Toronto; BlackRock; State Street Global Advisors; Vanguard Group; J.P. Morgan Asset Management; T. Rowe Price Group; Capital Group; ValueAct Capital; J.P. Morgan Chase; General Electric; General Motors; and Verizon Communications.
The full list of signatories is available on the group’s website, unveiled Thursday.
“There is no intention to make (other) people sign it (the set of principles),” said Margaret Popper, spokeswoman for the group. “The idea is to help move the discussion along.”
In terms of the lack of transparency about the group and its activities and participants, Ms. Popper said, “There was no intention to keep it secret. The intention was to come up with something useful and publish it.”
The Council of Institutional Investors, which was not part of the group, “welcomes the corporate governance principles,” saying “most are in sync with CII’s long-standing policies on corporate governance,” a CII statement said.
“That such an elite group has backed a broad governance framework makes clear that corporate governance has entered the mainstream and should be a focus for all public companies,” said Ken Bertsch, CII executive director, in the statement.
Mr. Bertsch applauded the endorsement of electing directors by majority vote and rejection of dual-class structures.
However, “the principles should have gone further on shareholder rights,” Mr. Bertsch said. “While they acknowledge the recent adoption of proxy access mechanisms by dozens of U.S. companies, they stop short of endorsing the common-sense right of long-term shareholders at all public companies to place their nominees for director on a company’s proxy card.”
