The time has long come and gone for companies to begin taking these issues seriously and start acting accordingly, with the Securities and Exchange Commission (SEC) cracking down harder than ever on corporate governance breaches, and new policies and regulations being enacted to further complicate these matters, and while many have begun taking steps in this new direction, others have chosen to sidestep the issue. Setbacks have also arisen as loopholes in these policies have been identified,though great strides have been made in this area over the past several years, and as companies begin pushing the corporate governance battle into new areas, these new attempts, combined with the policy gaps, have begun to create a number of unforeseen complications and have only made this effort more difficult in the long run.
A number of companies have already begun making changes to their policies which will increase the powers and rights granted the shareholders under these new governance regulations, in the name of promoting new methods and strategies for better compliance. Such approaches comprise of applying a staggered board as well as a dual-class share system, both of which are proposed to create a more even equilibrium of power throughout the organization’s numerous levels, but in doing so they have in fact cured some problems that others have created in their wake.
The ability of the SEC to effectively implement certain rules and regulations as a direct result of certain past failures which have only made it easier for organizations to challenge new rulings is among the new difficulties to arise as of late. As it appears that it has only become easier for company’s executives to justify even higher pay raises through the simple manipulation of shareholder votes, the “say on pay” issue has taken an unexpected turn. And finally, their decisions and attitudes seem to be turned more towards the procedures related to these issues rather than the quality of the decisions themselves, as companies begin to focus with an ever greater vigor on implementation of better corporate governance policies, so that, even though they are trying to do well, they are only ultimately hurting themselves.
One of the main problems facing better corporate compliance is a seemingly harmless division in what individuals see as being the end result of these procedures. On the one hand, while many see it as intended to reign in the power of a company’s executives and keep them in check on the other, many believe this to be a matter of increasing the value and rights of a company’s shareholders. What is most difficult to understand about this is that, there is in fact a wide gap of meaning between the two goals, while these two objectives may appear to overlap and strive for similar ends. By asking whether or not these issues ultimately lend value to the company in the long run, it is for this reason that companies need to begin taking a step back to better assess their objectives and determine if the projects and procedures they are undertaking are really conducive to their goals.