Corporate Governance

The traditional corporate governance model of shareholder primacy faces an extended period of transition, but exactly what comes next is unclear. Market actors - companies, trade associations, investors, legislators, and entities focused on environmental risk and social benefits - are debating the governance framework of stakeholder management – that is a framework that considers all of a company’s constituents: shareholders, employees, customers, suppliers, and surrounding communities.

That sentiment makes for good press, but the details have yet to be ironed out. How does a company set goals and measure progress? How does a company balance competing concerns? Would shareholders (with the power to elect the board) accept lower financial returns if it meant the company could increase wages or avoid layoffs, or pay for cleaner (but more expensive) energy?

The Center On Executive Compensation (COEC) supports a principles-based approach to disclosing data germane to a company’s risks and opportunities and developing effective corporate governance policies. At it’s best, corporate governance provides shareholders with the right and opportunity to hold boards accountable while also providing boards and executives with the authority to manage both the day-to-day operations and strategic planning.

Discover corporate governance news, including the latest on shareholder’s rights, board structures and policies, and emerging models such as Stakeholder Capitalism