Corporate Governance Reform May be the Theme for 2010, but Caution Should be the Watchword


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Published in Boardmember January 3, 2010 by Frank Aquila

In the wake of the fallout from the credit crisis we have seen a steady stream of corporate governance reform proposals. While many proposals focus on traditional measures designed to increase shareholder influence, most focus on issues not normally viewed as requiring shareholder input or approval. Proposals such as executive compensation, social responsibility, global warming, sustainability, government influence and political contributions are now high on many agendas.                                                                                       As these proposals are refined over the next few months, a few observations are timely. First, corporate governance now appears to be nothing more than the political fulcrum used to promote and justify a relatively broad range of new restrictions and requirements on Corporate America. Second, many of the groups now staking claim to the “corporate governance” turf are extraordinarily diverse with goals that go well beyond the creation of shareholder wealth. Whether we agree or disagree with their proposals or subscribe to their agendas is irrelevant, it is the current environment creating pressure for further corporate governance changes.

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