The global financial crisis revealed severe shortcomings in corporate governance, fueling debate on the responsibility of governance mechanisms and structures in promoting or preventing future collapses.
IESE's Pascual Berrone and Dionosio Garcia-Piriz analyze current systems and make recommendations for new governance policies in their chapter, "Will You Keep an Eye on My Investment? An Empirical Analysis of the Link Between Institutional Investors and Boards of Directors," which was published in Governance in Action Globally (Oxford: RossiSmith, 2013).
One of the basic assumptions of corporate governance is that the board's main purpose is to defend the interests of shareholders.
... two straightforward and easy-to-implement actions.
1. Align executive pay with long-term goals. The institutional investors surveyed felt that aligning bonus schemes with strategic objectives should be a priority.
2. Separate CEO and chair roles. Although most of those surveyed said they separated the roles of CEO and chair into two separate people, more than a third of companies interviewed maintained CEO/chair duality, in which the same person wore both hats, and only a few systematically rotated board members. This separation needs to better promoted and formalized.
See full Article: http://www.ieseinsight.com/doc.aspx?id=1494&ar=3&idioma=2
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