Campaign to limit Cadbury 2

PETER RODGERS and

NIC CICUTTI

The Stock Exchange and CBI have mounted a campaign to keep as narrow as possible the terms of reference of the successor to the Cadbury committee on corporate governance.

The two organisations are both reluctant to see a reopening of major issues affecting the boardroom, following a series of high-profile inquiries culminating in the Greenbury Committee on top pay. The chairman of the second-stage Cadbury committee, Sir Ronald Hampel, is to be confirmed shortly, following completion of the list of members with a nominee to represent the CBI.

Foot-dragging by the employers' organisation had been blamed for a long delay in setting up the committee, but it now appears that the committee's remit has been an equally contentious issue.

Adair Turner, the CBI's director general, complained recently about "corporate governance fatigue" in the boardroom and called on the new committee to look at ways of easing the burden of compliance for smaller companies.

The Stock Exchange, which is participating in the new committee as an observer, said companies had been dealing with a wide range of corporate governance issues recently and it was important to ensure they were not overburdened. There has been a mounting rearguard action against some of the recent changes in corporate governance, especially those put forward by Greenbury, which are to be implemented mainly by changes in the Stock Exchange rule book.

The start date for some measures has been put back and others, including the composition and duties of remuneration committees and the way pension values are calculated, have been delayed for further consultation. The pensions proposals, which will show huge pension boosts whenever directors receive large salary increases, have caused dismay because of the likely public uproar.

Separately, the National Association of Pension Funds has added a twist to the corporate governance debate, urging its members to play a greater role in the companies they invest in. The move by the NAPF, which represents almost 1,500 pension scheme managers and other experts, comes amid accusations that pension funds have been abdicating their responsibilities and in effect backing the status quo by not using their votes when they are entitled to.

A briefing issued yesterday by the NAPF stresses that voting was a shareholders' duty and a chance to improve corporate governance in the companies its members are involved in. Dr Ann Robinson, its director general, said: "Pension funds own more than a third of the ordinary shares in UK quoted companies. Many major investing institutions are now showing a voluntary commitment to the concept of regular voting, but more needs to be done."

The NAPF guidance says: "Unless major investing institutions can show ... commitment to ... regular voting, compulsion will almost certainly be introduced by legislation."