EU's new corporate governance proposals are tough but fair
June 2, 2010 4:45 PM
Originally published by Sharon Bowles MEP
Originally published by Sharon Bowles MEP
Sharon in Parliament
The European Commission has announced its plan to toughen up on corporate governance today.
The Green Paper for Corporate Governance in Financial Institutions represents a significant departure in the Commission's approach to corporate governance in the EU.
Failures of corporate governance are now widely regarded as a matter of public interest.
Proposals outlined in the Green Paper include the possibility of banning stock options for directors of listed companies in the EU, banning directors' severance packages, and increasing criminal sanctions for board directors.
Sharon Bowles, who chairs the European Parliament's Economic and Monetary Affairs Committee, said:
"The spectre of global financial crisis has lawmakers thinking about how best to mitigate new threats to economic security. Evidently, corporate governance will be subject to scrutiny.
"However, while this new, tougher approach to corporate governance might prove popular with the taxpayer, legal changes to corporate governance needs to be discussed with a hard head.
"Indeed, the Commission's proposals change the terrain of corporate governance quite dramatically. Those of us tasked with fine tuning these proposals must do so without sentiment.
"Corporate governance, in all its forms, should be accountable. The situation with Prudential this week shows what happens when corporate management becomes divorced from the concerns of its shareholders. That said, corporations should not feel stifled by legislation."
ENDS
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