The UK Corporate Governance Code - revised September 2014
The UK Corporate Governance has been revised and reissued after a public consultation.
It is probably fair to say that the changes are not substantial and it is unlikely Directors or investors will notice the impact in the short term. It can be seen more as a "polishing exercise" than a major revision.
The changes made include:
• Revised wording on declarations that a business is a going concern in financial reports with a need to declare any "material uncertainties".
• More declarations required on risk assessments.
• Remuneration provisions are amended with a new statement that:
"Executive directors' remuneration should be designed to promote the long-term success of the company. Performance related elements should be transparent, stretching and rigorously applied".
• The previous statement that a significant proportion of Executive Directors' remuneration should be performance related has been removed.
• The new code requires companies put in place plans to recoup or hold back variable pay, in addition they should place greater emphasis on designing pay plans with the long term health of the company in mind.
• If resolutions are voted down a company should in future say how they intend to engage with shareholders on the issue.
In summary, it seems a missed opportunity to substantially strengthen the Code with additional provisions. We would like to see a tightening of the provisions on the time commitment of both Chairmen and Non-Executive Directors. Also the provision on the Independence criteria for Non Execs.
