Achieving Investment Excellence

Appendix A

OECD PRINCIPLES

The OECD (Organisation for Economic Co-operation and Development) Principles of Corporate Governance provide guidance on the responsibilities of directors (OECD 2015; amended to pension funds):

1. Board members should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and the participants.
2. Where board decisions may affect different shareholder groups differently, the board should treat all shareholders fairly.
3. The board should apply high ethical standards. It should take into account the interests of stakeholders.
4. The board should fulfill certain key functions, including:
   1. Reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business plans; setting performance objectives; monitoring implementation and corporate performance; and overseeing major capital expenditures, acquisitions and divestitures.
   2. Monitoring the effectiveness of the company's governance practices and making changes as needed.
   3. Selecting, compensating, monitoring and, when necessary, replacing key executives and overseeing succession planning.
   4. Aligning key executive and board remuneration with the longer term interests of the company and its shareholders.
   5. Ensuring a formal and transparent board nomination and election process.
   6. Monitoring and managing potential conflicts of interest of management, board members and shareholders, including misuse of corporate assets and abuse in related ...