Non-executives in the spotlight again
Wednesday, December 16, 2009 | Posted by: Simon Lowe
Categories:
Governance,
Non-executive director
| Tags: risk,
FRC,
Simon Lowe,
FTSE 350,
Non-executive director,
Walker review,
Governance,
Corporate Governance review
The recent release of the Walker Review and the proposed reforms to the Combined Code set out by the FRC see further challenges set for NEDs and increased engagement by institutional investors.
The crisis experienced by banks over the last 18 months has inevitably raised questions about how they were run and the frameworks within which this was, or was not, happening. Two separate reviews of UK governance have been undertaken as a result: one by Sir David Walker looking specifically at Banks and other financial institutions, and the other by the FRC looking at the Combined Code.
The Walker Secretariat was the first to report their findings and although bankers’ bonuses have returned to the press, the requirement to disclose the banding of remuneration packages has received the greatest focus. Other recommendations focus on NEDs getting tailored induction and training programmes ensuring they understand company operations and risks, allowing them to be more effective in their oversight role when holding executive directors to account.
The FRC has recommended the adoption of many of the Walker recommendations. They propose to take responsibility for a separate stewardship code addressing the roles of investors and fund managers in particular, as well as reinforcing the roles of NEDs and the robustness of the review of board performance thereby making the board more explicitly responsible for risk.
Grant Thornton’s FTSE 350 Corporate Governance Review 2009 will be released in January 2010. The data from this research was used by both parties to support their reviews. (FTSE 350 Corporate Governance Review 2008)
The FRC consultation ends in March 2010 and will apply to companies with financial years beginning on or after 29 June 2010.
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