Higgs review gaining support
UK – Much of the criticism of the Higgs Report into UK boardroom management appears to be the result of a lack of understanding - rather than any fault of the proposals themselves.
After the report’s author Derek Higgs and treasury minister Ruth Kelly explained the principles of the report in detail at the NAPF conference in Edinburgh the number of delegates in favour of the recommendations increased rapidly.
Whether Higgs is a master of persuasion or whether the financial community was misinformed about his proposals - or even whether the report was itself at fault for appearing threatening - is open to debate. But votes taken before and after Higgs’ speech showed a significant warming to the recommendations.
Having heard Higgs’ speech, 24% more of the 400-strong audience agreed with his recommendations for strengthening UK corporate governance, taking the total support to 87%.
At the end of the session, 64% agreed that company chairmen should be independent on appointment – a rise of 36%. And 85% were in agreement that a senior independent director should be identified to be available to shareholders, from only 69% at the beginning.
Higgs and Kelly dispelled some of the myths that have grown up around the report. They pointed out that 80% of the top UK 150 companies already use a senor independent director, and assured the financial community that the report is “not a rulebook” but a statement of best practice.
“Just how far companies comply with the provisions, and at what speed, is rightly a matter between them and their shareholders,” explained Kelly. And Higgs emphasised that the principles were not a case of ‘one size fits all’. Indeed, each individual company could employ the principles most suited to them if they choose to do so. “It all depends,” said Higgs.
Higgs conceded that the report may have seemed ‘daunting’. He said that during the current consultation process the report would be more clearly drafted and made more user-friendly.
He said that the idea of ‘comply or breach’ that many observers had taken from the report was certainly not what he had intended.