Guaranteed Corporate Governance = Independent Oversight
Corporate governance are the procedures and policies according to which a company should be directed and controlled. The corporate governance structure details the theoretical distribution of rights and responsibilities among the board of directors, executive managers, shareholders, and other stakeholders and lays down the rules and protocols for decision-making. Sound corporate governance procedures and policies should provide a framework for accountable, efficient, and transparent management of publicly traded companies.
Corporate Governance can only be effective if the procedures and policies are lived by the employees, beginning with the CEO who needs to set the example for all other employees. Most importantly, Corporate Governance must be policed. This lack of oversight is the major flaw in the current system that allows preventable misbehaviors to establish, grow and flourish.
Some companies merely conduct Corporate Governance window dressing.
We have seen results of this lack of oversight in many examples; Madoff, Enron, Worldcom, Tyco, Parmalat, etc. The recent misbehavior of Volkswagen managers and employees, surprises once more. Corrupt behavior at VW halved the value of their shares and tarnished not only the misbehaving company, but the entire country.
Corporate executives are legally obligated to run their companies with shareholders’ best interests in mind. Shareholders suffer when companies are damaged by financial fraud, mismanagement, or other fiduciary misconduct. Sound corporate governance oversight acts as a safeguard against value destroying mismanagement, self-dealing, and misconduct.
Good corporate governance practices together with appropriate oversight will better align corporate and shareholder interests and Increase shareholder value by enhancing investor confidence. High Corporate Governance standards are essential to attracting and retaining investors in globalized capital markets, while failure is likely to hinder those companies’ ambitions. The interests of all stakeholders should be protected against corporate managers whose own interest may not necessarily coincide with those of the company’s shareholders.”
The Swiss Shareholder Association (SUISHARE) works vigorously on behalf of shareholders to pressure for the requisite oversight and ensure that improved corporate governance practices, procedures, protocols, guidelines, policies and behaviors are upheld. SUISHARE will not shy away from shareholder litigation and inspection demands to force corporate officers and directors to improve the transparency, effectiveness, and accountability. SUISHARE has a zero tolerance for corporate misbehavior.
SUISHARE believes the following steps must be taken to enhanced compliance and transparency:
- Tougher independence standards for members of the board of directors
- Separation of the roles of chairman and chief executive officer
- Better Gender representation
- 2 Board seats for Shareholder Association nominated directors to counter cronyism in Board appointments
- Presence on the board of 2 Employee representatives
- Increased board size
- Term limits for the board and committee members
- Strict insider trading rules and controls
- Auditors reporting to and paid through the Shareholder Association Office, and if not, rotation of auditors and Audit company every 3 years.
- Shareholder registry reporting through the Shareholder Association Office, ensuring a better separation of powers and prevention of election fraud.
- Establishment of company independent hotlines for reporting wrongdoing, and internal investigator entities reporting through the Shareholder Association. This will reign in senior management misbehavior.
- Enhanced whistle-blower protections
- Rigorous use of compensation claw-backs for misbehavior.