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and have withdrawn from the investing world.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
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
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.