Corporate Governance Committee

Policy Principles

• Advancing (and implementing) Modern Principles for Corporate Governance

  America's economy, workers and shareholders stand to benefit when U.S. public companies carry out the highest standards of governance. The board and management should engage with long term shareholders on issues and concerns that are of widespread interest to them and that affect the company’s long-term value creation, and should implement the highest standards of Corporate Governance.

• Modernizing the Shareholder Proposal Process through responsible shareholder engagement and long-term value creation

  Effective communication with shareholders is a critical element of the operation of today’s public company. The current shareholder proposal process is dominated by a limited number of individuals who file common proposals across a wide range of companies but own only a nominal amount of shares in the companies they target. These investors are pursuing special interests — many of which have no rational relationship to the creation of shareholder value and conflict with what an investor may view as material to making an investment decision. As a result, the current process is often used to promote the self-interest of a minority of shareholders, frequently at a significant cost to the company.

  Additionally, the $2,000 holding requirement should be replaced and proponent disclosure requirements should be enhanced.

• Eliminating Short-term Focused Earnings Guidance Forecasts

  Public companies should not feel obligated to issue quarterly or annual earnings guidance. Earnings guidance all too often leads to an unhealthy focus on short-term profits, at the expense of long-term strategy, growth and sustainability. Companies should be managed for long-term prosperity, not to meet the latest forecast. Quarterly, and even annual, profits are often the result of factors well outside of a company’s current control – including, for example, commodity price fluctuations, GDP trends and even weather patterns.

  Obsession with short-term forecasts can cause companies to sacrifice long-term performance by holding back on value-creating expenditures such as marketing and capital improvements in order to meet short-term forecasts.

• Supporting Smart Disclosure Reform

  Policymakers should maintain the materiality standard for determining what information public companies must disclose to investors. The time-tested standard is proven effective in protecting investors and helping them make informed investment and voting decisions. Deviation from the principle of materiality is costly to public companies, fails to serve the interests of investors and distracts the SEC from its core mission.

• Advancing Effective Oversight and Regulation

  Overly complex and burdensome U.S. financial laws and regulations hamper the ability of U.S. companies to invest and hire, without sufficient compensating social benefit. Several provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act impose needless requirements that do not result in economic benefit for American workers and families.