Financial Reporting Council - Developments in corporate governance 2011

The FRC pushed this out today on progress in implementing the UK Corporate Governance Code (and of less interest to me, the Stewardship Code. Outside of the news of what is to come (more consultation in 2012 on Audit Committees, Risk Management and Internal Control elements of the code) some interesting trends are reported;

• Code requirements on board and board committee composition all above 80% on the "comply" front - strangely the requirement for having at least half NEDS on the board was the worst area of compliance for FTSE 350 firms.
• Still having "diversity" and "gender diversity" spoken of in the same breath - more to come on that subject from me another time
• FRC are attributing some of the gripes from the industry on independence criteria and difficulty in recruiting good quality NEDs on their inability to look beyond "the usual suspects", and by doing so, they will enhance diversity.
• 80% of boards put themselves up for re-election annually in their entirety (one of the more controversial elements of the last set of Code revisions).
• Discussions regarding the expanded nature of the Board's responsibility for Risk (to essentially include consideration and setting of Risk Appetite) has led the FRC to schedule a revision to the old Turnbull guidance in 2012.
• Still griping about "boiler plate" annual report text.
• Some of the "explanations" given for non-compliance still said to be lacking
• Chairman's Statement suggestions made by the FRC appear to be bearing fruit
• Lack of consistency around the application and reporting of Board evaluations
• Disclosure on business model, strategy and risk (massive for Solvency II disclosure policy/SFCR purposes) is, because of a lack of guidance, allowing companies to determine their own levels of disclosure. However, the FRC are expecting more from companies in this regard.
• Very critical of the extent of reporting from the Audit Committee, hence the consultation due in early 2012. Also goes on to be untopically lightly critical of remuneration committee reporting in the same regard!