In this new Directors & Boards post, Lawrence A. Cunningham, professor emeritus of corporate governance at George Washington University, explains the evolution of—and critiques— the seemingly fashionable “one-size-fits-all” approach to corporate governance, reflecting a concern that the Society frequently expresses in our SEC and other regulatory comment letters. In that institutional investors, proxy advisors, and lawmakers may be incentivized to promote standardized “best” practices without regard to company-specific facts and circumstances, the post encourages companies to resist the pressures to jump on the “best practice” bandwagon (to the extent feasible) without consideration for the best interests of the company. Rather, companies should explain why particular practices they employ that may vary from “best practices” are in fact best for the company based on its unique circumstances.
Access additional resources on our Board Practices/Governance Practices page.
This post first appeared in the weekly Society Alert!