NACD Offers Guidelines To Bolster Public Confidence

The financial crisis has badly sapped public confidence in U.S. corporations, the National Association of Corporate Directors (NACD) believes.

So, the NACD has come up with a 10-point plan to help guide its members and restore respect.

The guidelines, proposed by NACD president and CEO Kenneth Daly, take governance to a new level. But they seem to fall short of backing many aspects of corporate democracy, such as direct shareholder nominations of director candidates.

Here are the NACD recommendations:

1. Boards are responsible for governance and need to design structures to ensure it.
2. Boards must be transparent.
3. Boards must be competent.
4. Boards should be accountable to shareholders and be objective in their outlook.
5. Board independence is a crucial and directors must be free of management control.
6. Boards need to promote a corporate culture of integrity, ethics and repsonsibility.
7. Boards must be free to set their own agenda and "directors cannot be unduly reliant on management for determining the board's priorities and related agenda, and information needs."
8. Measures are needed to prevent boards from becoming entrenched.
9. Shareholders should be allowed to elect directors by a majority vote. If a director does not get a majority vote in an uncontested election, he or she should resign.
10. Boards must pay attention to shareholders and carefully consider non-binding resolutions proposed by them.