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THE NATIONAL COALITION FOR CORPORATE REFORM


The members of the National Coalition for Corporate Reform (NCCR) are joining together to challenge corporate corruption and restore confidence in the financial markets. NCCR will unite institutional and individual investors, labor leaders, corporate CEOs, elected officials and community leaders in support of a program of corporate governance reforms, regulation and legislation. Our goal is to promote a program of reform that will build a strong, growing economy that benefits all.

The many recent corporate scandals have imposed huge costs on the national economy and on all Americans. Investors have lost billions of dollars, including funds many were depending on for retirement. Public pension fund losses have required governments to substantially increase their contributions, forcing them to reduce services or raise taxes. Private pension funds have sapped business resources as well. Workers have lost jobs not just in the scandal-ridden companies, but also at their suppliers and at other businesses dependant on those companies. Communities have lost companies that were critical parts of their economies.

In sum, the current corporate governance scandal touches all Americans, whether or not they invest directly in the stock market.

The full cost of the scandal cannot yet be fully calculated because of its continuous effect. Millions of investors no longer have confidence in the information they receive from corporate America and have withdrawn from the investing world. When investors and lenders hold back, the pain is inflicted on honest companies and business people who need to use the capital markets to build, expand and create new jobs.

New York Federal Reserve Bank President William McDonough summed it up well in a March 20, 2003 speech: “Recovery in the business sector continues to be restrained not just by geopolitical uncertainty and the need for further restructuring in some key sectors, but by caution on the part of investors and lenders. They continue to doubt the quality of internal governance and external oversight, as well as the reliability of the information corporations provide – in short, critical issues of investor and lender confidence.”

To rebuild a healthy, growing, job-creating economy, it is essential to restore confidence in corporate America. State Attorneys General, the Congress and the Securities and Exchange Commission have already taken some significant steps. Government regulators, rating agencies and outside auditors have important oversight roles to play. But the best place to stop corruption is inside corporations, by instituting policies and structures that prevent it or expose it early.

Investors have a unique and essential role to play in achieving this goal. As the owners of public corporations, investors have the right and the duty to ensure that their companies are operated properly. They have a strong interest in protecting their investments. And they have the power to make essential internal changes in the way corporations function.

Investors can most effectively play this role when they are organized and united behind a clear program of reform. That is the role of the National Coalition for Corporate Reform.

NCCR will unite investors -- institutional and individual -- with other stakeholders to fight for a program of accountability and reform.

As its core program, the Coalition will stress the importance of independent directors and boards and of management that is accountable to shareholders. The Coalition will focus its efforts on corporate governance structures that strengthen the ability to provide effective oversight of management, such as the composition, membership and committee structure of boards of directors, the character of executive compensation, the independence and transparency of audits and reporting, the responsibilities of shareholders, as well as issues specific to individual companies

NCCR will pursue this agenda through proxy voting, litigation, intervention in the regulatory process, and lobbying.

  • Proxy voting is a major form of communication between shareholders and managers. NCCR will promote shareholder resolutions and work to ensure that proxy voting is an effective means for owners to direct the management of their companies.
  • Litigation is a means of seeking redress when companies and others break the law and injure stakeholders. Lawsuits are a means of achieving not only economic restitution, but also strengthened corporate governance. NCCR will support shareholder suits and seek changes in laws and regulations that limit their ability to obtain justice and reform. The Coalition will urge investors to seek corporate governance reforms in all appropriate lawsuits.
  • Regulations must be aimed at the real problems that exist, must be adjusted as new forms of corruption and impropriety are uncovered, must apply standards that are both reasonable and effective, must provide penalties strong enough to be deterrents and must be backed by serious and permanent enforcement power. NCCR will work to strengthen regulations and regulatory agencies. The Coalition will seek to ensure that all regulatory agencies remain effective, independent and willing to put the interests of shareholders and the American people first.
  • Lobbying efforts will target changes in the Private Securities Litigation Reform Act of 1995, the Sarbanes-Oxley Act of 2002, the Class Action Fairness Act of 2003, SEC regulations, and state laws, where imbalances exist with respect to shareholder rights and corporate obligations.