For years, the United States has exported its brand of shareholder activism to Europe, Japan and Australia. Now, some securities lawyers and other experts on shareholder issues suggest it's time for a turnabout.
They believe the time might have come for the United States to import a code of best corporate governance practices loosely modeled along the lines of those adopted in the United Kingdom in 1992 and in Canada last year.
Other countries, too, have been moving toward a "one size fits all" approach to how their companies should be managed.
The Amsterdam Stock Exchange and the Dutch Association of Stock Exchange Listed Companies recently completed a study aimed at defining best practices for corporate boards and directors in the Netherlands. In France, the Vienot Commission has formulated governance benchmarks for companies there.
The suggestion that momentum is building for formal corporate governance standards in the United States comes at a time the California Public Employees' Retirement System, the largest public pension fund in the United States, is working with other shareholder activists and the business community to develop a set of model practices.
A blue-ribbon panel of the National Association of Corporate Directors also could give the effort impetus through its recent report on director professionalism, which suggests corporate boards monitor the structure and performance of directors.
The New York Stock Exchange and the NASD stock market already require companies listed on their exchanges to have board committees to assist directors in managing their responsibilities. What's more, companies listed on the American Stock Exchange must have an audit committee made up of non-employee directors.
And companies such as General Motors Corp. and Campbell Soup Co. have gone beyond such basic requirements by developing individualized guidelines for their boards.
"A prospective board member should ask if such guidelines exist when considering joining any board," Ira M. Millstein, chairman of the NACD blue-ribbon commission wrote in the introduction to the report. Mr. Millstein, who is senior partner at Weil, Gotshal & Manges in New York, is well known in corporate governance circles.
Talk among experts of the appropriateness of developing a code of best corporate governance practices in this country, inspired by Britain's Cadbury Committee, formally known as the Report of the Committee on the Financial Aspects of Corporate Governance, follows a similar recommendation by Richard H. Koppes and Constance E. Bagley of the Stanford University Law School in a recent article in the San Diego Law Review.
"The signals are beginning to point in the direction of a drift to best practices," said Patrick S. McGurn, director of corporate programs at Institutional Shareholder Services, Bethesda, Md.
"There is inexorable evidence that it is being considered," he observed, calling it "the first major import (in the corporate governance field) from the international world to the domestic scene."
James L. Goodfellow, a partner with the accounting firm of Deloitte & Touche in Toronto, and co-founder of an international corporate governance network, also suggests there is an opportunity for American institutional investors to "press the stock exchanges for more disclosure (by companies) of corporate governance practices," akin to the Canadian model.
"Then these practices will become public information and institutional investors will be able to make their own assessment of whether they are good or bad practices," he pointed out.
The movement toward developing corporate governance standards for American companies could be helped by U.S. pension funds increasingly pushing for other countries to adopt corporate governance standards.
"It's a little hard for Americans to say others should get their standards, but Americans don't have their own," pointed out Michael Useem, a management professor at the University of Pennsylvania's Wharton Business School.
"With the growth of cross-border investments and cross-border hunger by companies for capital, we are not only going to see a move toward national standards like Cadbury, but also international standards for corporate governance," Mr. Useem noted.
The NACD report on director professionalism gives companies pointed advice on structuring their boards, and how their directors should behave.
It suggests, for example, that directors should know how the capital markets work, and how to analyze balance sheets; and that chief executives serve as directors of no more than two other corporations.
But, Mr. Koppes and Ms. Bagley simply suggest the New York Stock Exchange and the NASD stock market require all companies listed on their exchanges to give investors only two pieces of vital information on how they are managed in their shareholder ballots.
Mr. Koppes, former deputy executive officer and general counsel of the California Public Employees' Retirement System, and Ms. Bagley, a professor of law at Stanford University, recommend the stock exchanges require companies explain to investors what their existing board structure is and their reasoning for having such a structure.
Companies listed on those exchanges would not be forced to abide by any mandate, rather they would be asked to explain to investors, for example, why their chief executive and chairman of the board are not separate people; and if their board does not have a lead director who would guide the company in the event of a vacuum created at the company's top.
"We are not mandating one size fits all. That is why we are saying, try everything, but if nothing fits, tell us why," Ms. Bagley said.
The Cadbury Commission, which was adopted by the London Stock Exchange and advocates a split between the chairman and the chief executive, or otherwise have a very independent board with the equivalent of a lead director, and at least three independent directors. The Canadian model differs somewhat in that companies listed on the Toronto and the Montreal Stock exchanges must disclose their corporate governance practices in their annual report to shareholders, and compare their practices against 14 guidelines based on the Cadbury code.
But some corporate governance experts disagree on the need for such standards in the United States.
"The U.S. is far too deep, too broad and diverse to set up any mandatory disclosures and standards," said Mr. Millstein. "What works for a corporation in New York might not work for a company in Dubuque, Iowa."
Others argue a mandate from regulators to adopt uniform corporate governance standards would stifle creativity and stop corporate directors from coming up with a set of guidelines that fits a company's unique needs.
The American Society of Corporate Secretaries, which represents corporate lawyers, also argues against a cookie-cutter approach. Scores of companies have voluntarily changed the way their boards are structured, or how they are managed in the spirit of "best practices" accepted by investors, they maintain.
And, while John C. Wilcox, chairman of Georgeson & Co. Inc., the New York proxy solicitation firm, agrees companies should offer investors - in their proxy statements - extensive detail on how they are managed, he sees little chance the stock exchanges will agree to adopting such requirements.
Instead, Mr. Wilcox suggests companies voluntarily include a "directors' discussion and analysis," in their proxies, similar to the management discussion and analysis section in their annual financial statements, that would discuss such issues as the company's particular capital structure, the selection process and compensation practices for directors, as well as any struggle for control of the board.
And Mr. Millstein predicts it is only a matter of time before investors demand companies disclose details of how they are managed in their proxies.
But he firmly opposes any regulations mandating companies provide such information to investors.
"If investors insist on knowing (how the companies are overseen), companies will have to disclose it," he said.