UK - The National Association of Pension Funds has rejected City criticism of the Higgs Review on the role of non-executive directors.
Liberty International chairman Donald Gordon called Derek Higgs’s proposals unrealistic, impractical and likely to be seriously detrimental to business if adopted – a view shared by several other senior executives.
But NAPF chief executive Christine Farnish rejected Gordon’s view.
She said: “The Higgs report seeks to strengthen the working of boards and improve their lines of communication with institutional investors, not to impose cumbersome new procedures.”
She added that it was the prerogative of any company board to decide if parts of the code were not appropriate and explain why.
Equally, it was the prerogative of investors to consider such explanations and draw their own conclusions.
Farnish said UK pension funds “do care about accountability and transparency and are entitled to be kept in the picture”.
Four of Liberty International’s non-executives would fail to meet Higgs’s four-step test for independence and Gordon said if the recommendations were adopted in full, he would need to recruit 10 new non-execs.
He explained: “If you take on new boys, you have to teach them and pay them at the same time – we are not running a university.”
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