IRELAND - Just over 20% of Ireland's corporate giants do not have a separate chairman and chief executive, breaching widely held codes for best corporate governance practice, according to the Irish Association of Investment Managers (IAIM).
According to its latest Corporate Governance Review 2001, IAIM recorded 21% of Irish publicly quoted companies as failing to have separated the roles. Of the top 15 companies, representing 88% of the market cap on the ISEQ, 12 have a separate chairman and chief executive. IAIM described the reasons given by companies for not meeting the Code as “inadequate”.
The Association cited an overall “high level” of compliance with the Combined Code of the London and Irish Stock Exchanges. The review surveyed all companies listed on the ISEQ across a range of issues.
Commenting on the results - which also focused board structures, the importance of non-executive directors and accountability to shareholders - Ann Fitzgerald, IAIM’s secretary general, said: “Naturally, there are areas where we feel some companies should adopt a different approach to their current practice and we intend to work with them on those areas.”
Other conclusions and recommendations included:
- most companies have a majority of non executive directors (NXDs), in excess of the Code requirements. Firms with a minority of NXDs should introduce an equality of executive and non-executive directors;
- the IAIM believes that the remuneration of NXDs should be “appropriate”;
- there was widespread compliance with the requirement that the majority of NXDs should be ‘independent’, although the IAIM called for a mutually agreed definition;
- several companies still had reservations about the appointment of a senior independent director on the basis that all directors are equal;
- companies should have internal limitations on length of service on the board;
- companies are urged to encourage senior executives to take up an external directorship, thus broadening their expertise and the available pool of NXDs;
- the quality of remuneration committee reports surveyed by the Association varied considerably in detail;
- a small number of companies still do not have an internal audit function.
By Madhu Kalia
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