Only 19% of Britain’s top companies meet investors’ highest corporate governance expectations, according to a survey carried out by the UK National Association of Pension Funds (NAPF).

In the report on compliance with the FSA’s Combined Code, the NAPF’s Voting Issues Service (VIS) found that nearly half (49%) of the UK’s top 400 companies failed to meet recommendations that only independent non-executive directors should set directors’ pay levels.

More than 40% of companies have also yet to meet investors’ expectations that executive directors’ notice periods should not exceed 12 months.

However, the NAPF says standards are improving, with compliance rates exceeding 80% in many cases.

Furthermore, the percentage complying with NAPF policy expectations in all respects has nearly doubled in just two years.

The VIS includes investment management firms and pension funds among its subscribers.

VIS Manager, Chris Baldry, comments:
“Examples of failure and mismanagement remain all too frequent. By publishing this report, we can help shareholders and companies alike to identify areas of weakness, and to compare this report’s findings with their own experiences of individual companies.
“UK standards of governance and disclosure remain unmatched amongst other leading markets. This report aims to help UK companies to continue to lead the way.”