Friday, 17 September 2010

Conservative thinking on corp gov

Here's a snippet from Jesse Norman's book Compassionate Economics. It's worth a quick read and perhaps not surprisingly for a Cameroon very much in the 'traditional economics has big flaws' mindset that is so popular these days. But the corp gov policy proposals, despite the preceding analysis being sound, are quite US-tastic:
“The key is to promote the exercise of independent ownership: by institutional shareholders, by corporate directors, and by trustees in corporate pension funds. Here are four simple suggestions for how to do so. The first is vigorously to enforce the trust law of ownership on financial institutions. A share’s vote is part of its value, and the trustees or directors of investment trusts, pension and hedge funds and other investing institutions should be made clearly legally accountable for its proper exercise. The second is to make it easier for shareholders to nominate entirely independent non-executive directors of their own choosing to corporate boards. This would create an independent link between the shareholders and the board, and break many currently cosy arrangements whereby non-executive directors are too close to the chief executive.”

“Our third suggestion is for non-executive directors alone to choose remuneration consultants and auditors, via the relevant board committees. Again, this would introduce greater accountability and transparency, especially on the ratchet on pay that comes from benchmarking senior executive compensation. And the fourth is for pension fund trustees, many of who are also corporate employees, to be explicitly required to act solely in the long-term interests of their beneficiaries, and to be protected in law when they do so. This would limit the power of boards to control corporate pension funds, and help to make them more genuinely independent financial institutions.”
Proxy access and a legal duty to use your voting rights sensibly? No wonder Mr Monks is listed in the 'thanks for advice' section...

No comments: