Highlights from the 2011 FTSE 350 Corporate Governance Review

Wednesday, October 26, 2011 | Posted by: Simon Lowe
Categories: Governance | Tags: governance, FRC, Board, compliance, FTSE 350, diversity, chairman, comply or explain, auditor, Davies report, transparency, effectiveness, internal control

Discover the key findings on compliance, board diversity, remuneration and other governance issues in our FTSE 350 Corporate Governance Review, published next month.

Corporate governance remains centre stage in 2011. The ‘comply or explain’ debate has been taken up by the European Commission’s Green Paper on the EU Corporate Governance Framework, board diversity championed in the Davies Report and narrative reporting addressed by the FRC. 

Next month, in November 2011, Grant Thornton will release its 10th annual FTSE 350 Corporate Governance Review. Over that period, straight compliance has nearly doubled to 50%, from a low of 28% in 2005. More importantly, only 16% of companies now give little explanation as to why they choose not to comply, compared with 50% in 2002.

Highlights from the 2011 Corporate Governance Review:

• Comply or explain – Seven FTSE 350 companies have been in full compliance with the Combined Code throughout the 10 years of the review.

• Board diversity – There are just 228 female directors with 140 companies still having all-male boards; 72% don’t disclose gender policy.

• Governance culture – More than half of chairmen do not discuss governance in their statements and only 10% give real insight into their governance culture.

• Board effectiveness – 25% of companies had externally facilitated board evaluations in the year, with a further 17% planning such a review in the next year.

• Remuneration – The average maximum director bonus rises to 147% of basic salary.

• Audit transparency – Only five FTSE 350 companies changed external auditor in the year. Average audit tenure is now 34 years. Only 17% mention when audit services were last tendered.

• Risk and control – Only 25% of companies give real insight as to how they monitor and maintain effective oversight of the systems of internal control.

Look out for our full report, which will be published in November. 

For corporate governance help and advice, visit our Governance Advisory page.

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* Pressure remains on companies to improve female representation on boards  
* The future of narrative reporting
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