Glass Lewis Thoughts on the “Commonsense Principles of Corporate Governance”

While the Principles may disappoint investors expecting a more comprehensive and robust approach similar to that found in the UK and other countries, there are a few areas where the principles promote forward-thinking stances. For example, the Principles criticize dual class voting structures and state that companies should consider specific sunset provisions based upon time or a triggering event to eventually eliminate dual class structures. This is notwithstanding the dual class structure at signatory Warren Buffet’s company Berkshire Hathaway. (However, unlike other dual class structures that are solely designed to ensure insider control despite disproportionate economic value, both classes of shares are widely owned and freely traded: while the two share classes otherwise enjoy the same proportionate rights, the Class B shareholders have just 1/10,000th of the votes of the Class A shares despite the B shares trading at roughly 1/1,500th of the Class A shares.)

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