Corporate governance in America: The fight for better boards

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Issue: 

Losing Afghanistan

Fly Title: 

Corporate governance in America

Location: 

New York

NEW regulations are emerging from Congress in response to the meltdown in the financial industry. Yet their impact, likely to be felt by every public company in America, may weaken rather than strengthen corporate governance.

It was the glaring weaknesses exposed in the boards of Wall Street giants such as Citigroup and Lehman Brothers that prompted some in Congress to propose making it easier for shareholders to nominate candidates for election as directors—something that had hitherto been costly and time-consuming. CalPERS, a big Californian pension fund, is said to have been recruiting a bench of candidates in expectation of a sharp increase in contested elections. Then something went wrong in the process by which two different reform bills passed by the House of Representatives and the Senate are likely to be reconciled.

Reformers have for years tried to make it easier for shareholders to nominate directors by securing readier access to the proxy forms that firms circulate before voting on board candidates at annual meetings. But company bosses have ...