In the UK, Grant Thornton has published its Corporate Governance Review 2013 entitled "Governance steps up a gear".
The key findings of the report were as follows:
- 57% of FTSE 350 companies now comply with the UK Corporate Governance Code, up from 51% over the past three years;
- Non-audit fees paid to auditors fell by almost a quarter;
- Only 27% of companies gave real insight into how they review the effectiveness of their systems of internal control;
- Early trends for chairmen to emphasise the importance of values and culture as the cornerstone of governance have stalled;
- Personal accountability is this year's clear trend with 60% of chairmen providing personal introductions to the corporate governance statement. The proportion of committee chairmen personally introducing their reports has also risen significantly;
- The average annual report is now 134 pages long, with the front end continuing to grow by about three pages per year;
- Only 16% of companies provide a description of their business model and future plans that effectively links strategy to key risks; and
- Despite the huge impact of technology on all businesses, just six FTSE 350 companies have a chief information officer on the board.
Giving "the regulator's perspective" on the report, Chris Hodge of the Financial Reporting Council (FRC) commented on two observations in the report, namely, (a) the low profile of nominations committees in contrast to audit and remuneration committees, and their less proactive reporting; and (b) the poor quality of FTSE 250 explanations compared to the FTSE 100. Looking ahead, he said, the FRC intends to do further work to help companies improve both these areas.
Other interesting aspects of the report include details of the most common areas of non-compliance of FTSE companies. They included:
- Insufficient independent directors on the board (12.7%);
- Failure to meet the remuneration committee membership criteria (6.7%);
- The roles of chairman and chief executive officer combined (5.7%);
- Chairmen did not meet the independence criteria on appointment (5%);
- Failure to identify each non-executive director considered to be independent (4.7%); and failure to meet nomination committee membership criteria (3.4%).