The draft introduces or expands upon a number of topics that were inconsequential in 2004, several of which are worth noting, including:
- Proxy access – Shareholders should have access to the company’s proxy.
- Shareholder-nominated director candidates – Board has a responsibility to consider candidates put forth by shareholders.
- Political spending disclosure – considered a good practice to allow investors to hold the board and management accountable for company funds
- Board leadership structure – Companies should disclose the rationale for combining the CEO/Chair roles. Separation of the roles is generally regarded as good practice, although designating a lead director with clearly delineated authority is regarded as a good practice alternative in some jurisdictions.
- Internal audit – Large companies should be encouraged to have an internal audit function to oversee the internal control system.
- Risk management – Companies in all sectors with large or complex risk exposures (financial & non-financial) should consider a reporting structure that includes the company’s direct reporting to the board on risk management issues. Boards should consider establishing risk committees to support the board and help avoid audit committee overload.
Comments are due to OECD January 4, 2015, and will be published online unless otherwise requested.
About the OECD
The mission of the Organisation for Economic Co-operation and Development (OECD) is to promote policies that will improve the economic and social well-being of people around the world. The OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems.
Randi Val Morrison
Guest Post: Randi Val Morrison is Associate Editor of TheCorporateCounsel.net, CompensationStandards.com and DealLawyers.com. She has approximately 20 years of experience as in-house counsel with publicly-traded companies, having most recently served as Senior Vice President, Legal, Secretary & General Counsel of DineEquity, and, prior to that, Senior Vice President, General Counsel & Secretary of CSK Auto Corporation. This post originally appeared on the The Mentor Blog on December 11, 2014. Publisher’s note: I added the graphics and note about the OECD.