Business Roundtable (BRT) today issued its Principles of Corporate Governance 2012, which update its April 2010 principles. The principles were updated to “reflect the new circumstances of Dodd-Frank Wall Street Reform and Consumer Protection Act implementation and the continuing evolution of best practices.” The 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 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. Gibson Dunn serves as counsel to BRT’s Corporate Governance Committee.