NACD's New Proxy Disclosure Template Enables Corporate Boards to Clearly Articulate Their Value to Shareholders
Prepares For Further SEC Board Composition Disclosure Requirements Related to Dodd-Frank Act
WASHINGTON, Aug. 24 /PRNewswire/ -- In light of the forthcoming U.S. Securities and Exchange Commission's (SEC) proxy access hearing on Wednesday, August 25, 2010 and eventual ruling, The National Association of Corporate Directors (NACD) is providing corporate boards and directors with public access to a new Template for Disclosure of Director Skills and Attributes. The template will help directors fulfill the 2009 SEC requirement obligating boards to disclose their rationale for director qualifications and their process for determining the right mix of directors for executing the board responsibilities.
The template empowers boards to proactively present these disclosures going forward, and helps to position the board positively with shareholders who are demanding increased transparency. Importantly, this resource will enable corporate boards to clearly articulate how board composition is linked to shareholder value within the context of unique skill sets, experiences and the strategic value they bring to their boards.
As the SEC currently considers how to enact the corporate governance provisions of the Dodd-Frank Act, it is likely that further regulation will grant shareholders greater access to the board's nomination process, giving them increased control to remove individual board members. In a previous comment letter to the SEC, NACD warned that a federal, one-size-fits-all approach for proxy access could politicize elections, potentially leading to a more factionalized board with special interests represented. Further, constituent directors representing their own interests could violate the fiduciary duty of loyalty to the corporation as a whole, by failing to represent all shareholders.
"The stakes are far too high in today's corporate environment for directors to relinquish their critical role in building boards that represent the interests of all shareholders for the long-term," said Kenneth Daly, President & CEO of NACD. "That said it is incumbent upon boards to better articulate the value that their directors bring to the table. Using this disclosure template will empower boards to proactively lead the conversation about their composition."
Boards of directors can utilize the template to become more effective in areas such as:
- Articulating director qualifications that align with the strategic goals of the company,
- Defining and demonstrating the nominating/governance committee's primary role in vetting director nominations and elections, and
- Identifying the common ground among the director, management, institutional investors and shareholder communities
The release of the proxy disclosure template comes on the heels of the NACD Key Agreed Principles to Strengthen Corporate Governance for U.S. Publicly Traded Companies, a practical guide to review board processes and enrich the level of dialogue in the boardroom. NACD's new proxy disclosure template augments many of the Principles which represent the results and common ground from 18 months of collaboration between NACD, hundreds of corporate board directors, management and shareowner organizations. Both resources are available to corporate boards to help them increase communication and transparency with shareholders and regulators and exemplify leading board practices.
About NACD
The National Association of Corporate Directors (NACD) is the only membership organization delivering the information and insights that corporate board members need to confidently navigate complex business challenges and enhance shareowner value. With more than 10,000 members, NACD advances exemplary board leadership. NACD is focused on creating more effective and efficient boards through director-led education and peer forums to share ideas and leading practices based on more than 30 years of primary research. Fostering collaboration among directors and governance stakeholders, NACD is shaping the future of board leadership. To learn more about NACD, visit www.NACDonline.org.
SOURCE National Association of Corporate Directors
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