- Board of Directors
- Corporate Governance Advisory Council
- Markets Advisory Council
- CII Staff
- Press Releases
Council of Institutional Investors Says Lyft’s Planned Dual-Class Structure is Harmful to Investors Media Advisory
CII Spring Conference, March 4-6, Washington, D.C.
CII Statement on Share Buybacks CII Research and Education Fund Publishes
Guide to Disclosure of Board Evaluation Processes
Investor Group Applauds CommonSense Principles 2.0 CII Fall Conference, October 23-25, New York City Leading Investor Group Responds to President’s Tweet on Quarterly Financial Reporting Investor Group Responds to Wall Street Journal Editorial CII Applauds Shareholder Protections in House Bill CII Elects New Board, Names Florida SBA Executive
Director & CIO Ashbel Williams Chair
New Report Details Practical Steps Corporate Boards Can Take to Combat Sexual Harassment CII Applauds SEC Commissioner Jackson's Call for Listing Standards to Require Sunsets on Dual-Class Stock CII Spring Conference, March 12-14, Washington. D.C. CII Announces Advisory Council Members for 2018 CII Report Highlights Risks Associated with a Common Chinese Corporate Structure Institutional Investors Oppose Stitch Fix Dual-Class Structure but Welcome Sunset Provision Uber’s Governance — Investor Response Do Not Disadvantage US Investors on Research,
CII Asks SEC
CII Fall Conference, September 13-15, San Diego CII Welcomes S&P Dow Jones’ Decision to Ban New Multi-Class Companies from Key Stock Indexes CII Applauds FTSE Russell Decision to Set Voting Rights
Minimum for Inclusion on Indexes
Investor Group Urges Blue Apron to Ditch No-Vote Shares Institutional Investors Dismayed by House Passage of
Financial CHOICE Act
CII, Institutional Investors with $4+ Trillion in Assets Oppose
Anti-Shareholder Provisions of the CHOICE Act
Council of Institutional Investors Executive Director Ken Bertsch Testifies on the Financial CHOICE Act Institutional Investors Oppose Key Provisions
of the Financial CHOICE Act
- CII in the News
- Governance & Financial Information
- Join & Support
- Contact Us
Investor Group Applauds CommonSense Principles 2.0
Washington, D.C., Oct. 18, 2018 — The Council of Institutional Investors (CII) praised CommonSense Principles 2.0, a set of corporate governance principles unveiled this morning by a group of business and investment leaders. This is an updated version of a code developed by JPMorgan Chase Chairman and CEO Jamie Dimon and others in 2016.
“We see significant improvement in CommonSense 2.0,” said CII Executive Director Ken Bertsch. “Important revisions include a strong statement of the right of shareholders to elect directors who they believe are best suited to represent shareholder interests, backed up by better language encouraging a consequential majority vote standard (boards ‘ordinarily should accept’ the resignation of a director who fails to receive majority support); endorsement of proxy access; and a statement that annual election of all directors can help promote board accountability to shareholders.” (The original CommonSense Principles did not address annual election of directors.)
There are differences with CII Corporate Governance Policies, which, for example, more strongly support annual election of directors. CII’s member-approved Corporate Governance Policies have been developed and refined over 33 years, and are a benchmark for investor-oriented policy on shareholder rights and corporate governance. But, Bertsch noted, the “thoughtfulness and clarity of CommonSense 2.0 on many key elements required for effective corporate governance is an important contribution.”
Comments on specific aspects of the principles follow.
Proxy advisory firms
Bertsch said CommonSense Principles 2.0 “puts the correct focus with regard to proxy advisors – on asset manager responsibility to make appropriate use of proxy advisor research.” He said: “I would hope that the CommonSense language would herald a shift from business leaders attacking and seeking to hobble proxy advisors, to a more mature focus on asset managers and asset owners who actually vote in corporate elections.” Bertsch said the new CommonSense language “is entirely on-point”:
To the extent they use recommendations from proxy advisors in their decision-making processes, asset managers should disclose that they do so, and should be satisfied that the information upon which they are relying is accurate and relevant. Proxy advisors whom they use should have in place processes to avoid or mitigate conflicts of interest.
CommonSense 2.0 more closely aligns with CII policies
Bertsch noted that the updated version includes acknowledgement of shareholders’ right to nominate their own candidates for directors on company proxy ballots (“proxy access). He also praised other aspects of the principles:
- New emphasis on director duties of loyalty and care, and director accountability to shareholders
- Emphasis throughout that directors should be “shareholder-oriented”
- The need for board committee independence
- Expanded discussion and encouragement of company engagement with shareholders
- New language discouraging adoption of poison pills and other anti-takeover measures, with the assertion that if such measures are adopted, they should be put to vote of shareholders
- Strengthened language on explaining use of non-GAAP measures in corporate reporting, and the need to bridge to comparable GAAP items
- Strengthened language on the importance of independent board leadership
- A new section directly aimed at institutional asset owners, who are encouraged to use their position “to advance sound and long-term oriented corporate governance.”
Johnson & Johnson Chairman and CEO Alex Gorsky is another new signatory. Gorsky, who also chairs the Business Roundtable’s Corporate Governance Committee, will be interviewed by CII Board Chair Ash Williams at next week’s CII fall conference in New York.
Click for PDF version. For media inquiries, please contact Rosemary Lally.