Summary

In the aftermath of the corporate crises of the last decade academics, market participants and politicians worldwide have engaged in inquiries and debates to identify the root causes of the crises and design reforms to prevent their recurrence. As a large institutional investor who invests on behalf of over 3.4 million individuals in order to insure that they get to and through retirement, we believe our role in these debates is to reflect on the role of shareholders. For more than 90 years, TIAA has promoted good corporate governance and believes that good corporate governance is critical to well-functioning securities markets. Upon reflection on the events of the last decade, we believe it is imperative that all shareholders collectively embrace the need to play an even greater role in strengthening corporate governance practices of the companies in which they invest. This paper focuses on what steps we believe could promote more effective corporate governance and provides recommendations as to what shareholders should do going forward to prevent future crises. Through engagement, careful monitoring and increased dialogue, shareholders should use their rights responsibly to hold boards of directors accountable. How investors respond to this challenge will be critical to the future growth of our economy, the success of our equity markets and increased returns for their beneficiaries.