For more than two centuries, the American free
enterprise system has led to enormous prosperity for our country: the creation
of jobs, increases in wages and savings, and the emergence and growth of
dynamic companies. Because well-managed and well-governed businesses are the
engine of our economy, good corporate governance must be more than just a catch
phrase or fad.
It’s an imperative – especially when it comes to our
publicly owned companies. Though they account for only 5,000 of our country’s
28 million businesses, our public companies are responsible for one-third of
all private sector employment and one-half of all business capital spending,
both of which ultimately drive the productivity and health of the country.
To ensure their continued strength – to maintain our
global competitiveness and to provide opportunities for all Americans – we
think it essential that our public companies take a long-term approach to the
management and governance of their business (the sort of approach you’d take if
you owned 100% of a company). While most everyone agrees that we need good
corporate governance, there has been wide disagreement on what that actually
means.
So we gathered a small group of executives to see if
we could reach some consensus on what we think works in the real world. This
group included the CEO of several major asset managers, one activist investor and
one public pension plan, as well as several publicly owned companies. We did
not convene a group of this size to be exclusive but, rather, so we could sit
around a room and have a mature conversation about this important topic –
something that would have been very difficult to do in a much larger forum.
Indeed, even among our small group, we don’t agree on absolutely everything.
But we do agree that, taken as a whole, these
principles are conducive to good corporate governance, healthy public companies
and the continued strength of our public markets.
Thus, we are steadfast in our determination not to let
our minor differences imperil this important effort. The principles set forth a
number of commonsense recommendations and guidelines about the roles and
responsibilities of boards, companies and shareholders.
We firmly believe that empowered boards and
shareholders, both providing meaningful oversight, are critical to the
long-term success of public companies. But knowing that there is significant
variability among the thousands of such companies and understanding that both
context and circumstance matter, we have tried not to be overly prescriptive in
how to achieve those goals. We also recognize that we live in a dynamic,
fast-changing world – and that while many of these principles are and should be
part of the corporate governance permanent landscape, some will inevitably
change over time.
These principles are not intended to be for or against
activists, proxy advisors or special interest groups. While we know that not
everyone will agree with everything in them, we hope that, at the very least,
these principles will serve as a catalyst for thoughtful discussion. More than
90 million Americans own our public companies through their investments in mutual
funds, and millions more do so through their participation in corporate, public
and union pension plans.
These owners include veterans, retirees, teachers,
nurses, firemen, and city, state and federal workers. We owe it to all of them
– and to all our shareholders and investors who have entrusted us with their
savings – to get this right.
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