David Prosser: Another challenge for the LondonStock Exchange

Outlook Do non-executive directors go native in the end? That they may do is the assumption of the UK Corporate Governance Code, which sets nine years as a possible limit on the service of non-executives at publicly listed companies. After that time, the concern is that non-executives will have become so close to the companies they serve that their independence might be compromised.

Pirc, the corporate governance group, is recommending that shareholders in the London Stock Exchange should vote against the re-election of two of its directors at the forthcoming annual general meeting. Janet Cohen and Robert Webb, Pirc points out, have both been LSE non-executives for longer than nine years.

Nor are Pirc's worries confined to Ms Cohen and Mr Webb. It also suggests that shareholders ought to veto the reappointment of two more non-executives, Sergio Ermotti and Andrea Munari, because they are closely linked to banks that have large shareholdings in the LSE. The Code suggests that non-executives' independence might be compromised if they are representatives of significant shareholders.

It should be said that the LSE rejects the criticism, arguing that all four directors have given convincing demonstrations of their independence while going about their duties. It's also true that Pirc's position is not shared by all corporate governance watchdogs. The Association of British Insurers, for example, which has become increasingly interventionist on these sort of issues, is not making the same recommendations as Pirc.

Still, there will be many investors who worry about even the suggestion that there are question-marks hanging over the independence of four of the nine non-executives on the LSE's board. And all the more so given the difficult experience that the exchange has just been through, with the collapse of its deal to merge with TMX, the Canadian exchange.

That reverse has prompted feverish speculation that the LSE, the target for a string of admirers over the past decade, might once again be the subject of a bid – with Nasdaq the most likely contender. Should such a bid emerge, it would be just the moment, of course, when shareholders want to have a board in which they can be really confident – the independence of non-executives included.

The Corporate Governance Code does not preclude companies having non-executives that fall foul of the guidelines above – it says they should explain why they have reached the conclusion that the independence of the directors has not been compromised. The LSE has done so, most recently in its annual report, but though it will undoubtedly win the day at its agm in a two weeks' time, it shouldn't expect these questions to go away.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Gabriel Agbonlahor, Alexis Sanchez, Alan Pardew and Graziano Pelle
footballAfter QPR draw, follow Villa vs Arsenal, Newcastle vs Hull and Swansea vs Southampton
New Articles
i100... she's just started school
ebooksAn unforgettable anthology of contemporary reportage
New Articles
Life and Style
Couples have been having sex less in 2014, according to a new survey
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... despite rising prices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam