04/05/2009

In a written submission to the OECD Steering group on corporate governance ahead of TUAC/BIAC consultations on 20 April, the TUAC calls for the OECD to respect diversity of national corporate governance regimes, including those that give workers a right to participation, consultation and information. Looking forward, the TUAC calls for the OECD to regain leadership in the field of corporate by crafting a new paradigm based on effective accountability to all constituencies of the firm and to society at large,, aligned with binding regulation. More specifically the TUAC recommends the OECD to:

• investigate the procyclicality of shareholder remuneration policies that are based on the concept of "free cash flow";
• enhance discussion on board independence and competence to include rights to relevant ex-ante information from management;
• develop meaningful policies to regulate executive remuneration, based on objective criteria for defining the long term interest of the company and equitable ratio between executive pay and that of the workforce;
• empower regulators and supervisors to intervene in case of failure in risk management policies and empower employee representatives to be a countervailing force to top management (bottom-up approach);
• to improve governance structures for institutional investors, both asset owners and asset managers;
• to mainstream responsible activism by tightening regulation of the asset management industry (including obligation to disclose voting records on behalf of their clients) and of private pools of capital (including transparency and accountability of their internal governance);
• to develop a set of criteria to qualify activism according to the intended goals, and whether the latter serve the long interest of the company, or alternatively fuel short-termism.

link:

• 21/04/2009| Corporate governance: TUAC submission to the OECD