Published: June 27, 2012
Washington – Business Roundtable (BRT) today released updated principles for corporate governance that reflect the new circumstances of Dodd-Frank Wall Street Reform and Consumer Protection Act implementation and the continuing evolution of best practices. The principles come at a critical time for the U.S. economy, as employment and economic growth remain well below their normal levels.
“U.S. corporations create millions of jobs for American workers, drive innovation and economic growth and provide health care and other benefits to millions of families,” said Alexander Cutler, Chairman and CEO, Eaton Corporation, and Chair, BRT’s Corporate Governance Committee. “The way corporations are governed directly affects the wellbeing of workers, shareholder and consumers – and the health of the overall economy. BRT’s new Principles of Corporate Governance are a guidepost for American corporations that are leading the way to more U.S. jobs, increased economic growth and greater shareholder value.”
In their Principles of Corporate Governance 2012, which represents the best thinking on how to govern companies to create long-term value for workers, shareholders and consumers, BRT CEOs noted that the updated principles are intended to advance the ability of public corporations to compete, create jobs and generate stable economic growth.
BRT’s new Principles of Corporate Governance include important updates in five key areas:
· Independent Leadership
BRT endorses the appointment of a lead director where a board combines the positions of CEO and chairman or has a chairman who is not independent. BRT also recommends that the board evaluate its leadership structure annually.
· Whistleblower Provisions and Compliance Oversight
BRT recommends that companies establish procedures for handling reports of all types of misconduct, including violations of law and the company’s code of conduct. Company audit committees should meet at least annually with the person who has day-to-day responsibility for a company’s compliance program.
· Risk Oversight
BRT highlights the important role of board of directors in risk oversight, emphasizing the link between strategy and risk and the need for a risk oversight structure that enables a board to understand the company’s major risks, how they relate to the company’s strategy, and what the company is doing to manage these risks.
· Shareholder Communication and Engagement
BRT emphasizes the importance of communication with shareholders and considering the views of shareholders. BRT also notes that, although companies should consider shareholder views, the board has a duty to act in the best interests of the company and all its shareholders.
· Political Activities
BRT recommends that, at companies engaged in political activities, the board of directors should have oversight responsibility and consider whether to adopt a policy on disclosure of these activities.
BRT last issued its Principles of Corporate Governance in April 2010. Today’s update is part of BRT’s ongoing commitment to promulgate the most current thinking on how best to govern U.S. corporations, to ensure they remain among the most efficient, well managed and responsible business entities in the world.
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Business Roundtable (BRT) is an association of chief executive officers of leading U.S. companies with over $6 trillion in annual revenues and more than 14 million employees. BRT member companies comprise nearly a third of the total value of the U.S. stock market and invest more than $150 billion annually in research and development – nearly half of all private U.S. R&D spending. Our companies pay $163 billion in dividends to shareholders and generate an estimated $420 billion in sales for small and medium-sized businesses annually.
BRT companies give nearly $9 billion a year in combined charitable contributions.