UK - Pension funds have welcomed a diluted version of the Higgs Review on corporate governance which has been incorporated into a revised code for boardrooms.
But schemes had initially feared that the revamped “combined code” would be too prescriptive.
NAPF investment council chairman Ken Ayers said: “We were concerned that some of the proposals in Higgs’s Review, when translated in the revised combined code, appeared too prescribed.
“I believe that with the publication of the final version of the code, this has now been rectified.”
Financial Reporting Council chairman Sir Bryan Nicholson said the code “will foster far-reaching changes in British boardroom practice and help to develop further the professionalism of non-executive directors”.
The new code seeks to clarify the roles of chairman and senior independent director – emphasising the chairman’s role in leading the non-executive directors and in communicating shareholders’ views to the board.
Sir Bryan explained: “The intention is that provisions should be as clearly defined and verifiable as possible so companies can report unambiguously whether or not they have followed them.”
It should also encourage open dialogue between company boards and institutional shareholders, he said.
Association of British Insurers director general Mary Francis said the code was a good step forwards for corporate governance practice.
“Companies and investors now need to put their differences behind them and move forward together to implement this code in a constructive way,” she added.
But trade unions were more sceptical.
The TUC said the code had the potential to make Britain’s boardrooms work better but it was up to business to turn good words into good practice.
General secretary Brendan Barber said: “Companies have to show how they are sensitive to workers’ pay and conditions when setting bosses’ pay.
“For this to have any meaning, big investors who look after the pension funds of millions of workers must consider it when voting in company AGMs.”
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