Commentary on the OECD Principles of Corporate Governance

Abstract

This paper was written in response to the OECD 2014 Review of the OECD Principles of Corporate Governance, which sought to modernize the 2004 Principles. We provide a detailed textual analysis of the draft revised text of the Principles and propose concrete amendments with the aim of managing companies for the long-term, focusing on creating sustainable value for the company, society and the environment.

We highlight the Principles’ repeated, legally incorrect, references to shareholders as ‘owners’. We also analyse the way in which the Principles incorporate a number of current regulatory trends and policy debates, including shareholder engagement, say on pay, corporate purpose, board diversity and stakeholder engagement.

Keywords: Corporate governance, short-termism, boards, managers, shareholder rights, boards, directors, executive compensation, stock options, sustainability, ownership, remuneration policy