Corporate Governance is the system of principles and processes by which a corporation is managed that defines the relationships among the board, shareholders, management and other stakeholders in a manner designed to promote long-term growth in share price. Specific to executive compensation, the Center believes that a board-centric approach to corporate governance is best and that consistent with that approach, best practices should ensure that compensation decisions are aligned with the best interests of shareholders and other stakeholders. Several executive compensation issues are directly related to or touch on corporate governance, including:

• Board Compensation Consultant Independence
• Clawbacks
• Compensation Committee Independence
• Executive Pay Litigation
• Incentives & Risk
• Institutional Investor Engagement
• Shareholder Activism
• Shareholder Resolutions
• Stock Ownership Guidelines

Executive compensation plans should be fully compliant with all applicable laws and companies should provide clear disclosures of the plans, thus allowing shareholders to understand the company’s compensation and governance decisions and the rationale behind those decisions. The Center continues to advocate that each company’s board of directors is in a superior position to make the critical decisions affecting corporate governance and executive compensation.