Unveiling what he admitted was a low-key report, Sir Ronnie Hampel, chairman of ICI, said the committee's findings were designed to build on the earlier Cadbury and Greenbury reports on corporate governance and executive pay and were not intended to constitute a revolution.
In a plea for the use of common sense and judgement over rigid codes and rulebooks he said the corporate governance debate had moved too far in favour of accountability and too far away from business prosperity. "We wish to see the balance corrected," he said. Governance codes should not be treated as prescriptive codes which encouraged a "box-ticking" approach.
Dismissing accusations of complacency, he added: "I don't see anything macho in producing a revolution. We think the total document sets the proper framework for governance." He admitted that he had questioned whether the committee had been necessary in the first place and said he hoped there would not be another "in the foreseeable future."
The report was roundly criticised by Pirc, a leading corporate governance consultancy, which said it was a "sideways shuffle" and a "missed opportunity which failed to take the debate forward".
Anne Simpson, Pirc's joint managing director, said: "If Ronnie Hampel set out not to make history, he has succeeded. In a rising stock market it is easy to forget the importance of rigour. And to advise common sense is to state the obvious. While the report has some positive elements it does not take the debate any further forward than Cadbury five years ago."
As expected, the Hampel committee rejected calls for continental-style two-tier boards saying the unitary board had overwhelming support. Hopes for a shareholder vote on executive remuneration were also dashed with Sir Ronnie saying such matters could be discussed in the normal round of meetings between companies and institutional investors.
The main changes were that non-executive directors should form at least a third of the board and that companies should use their annual meetings more effectively by including a presentation to shareholders.
The report fudged the issue of whether the chairman and chief executive roles should be split. It said that while separation was preferable, there might be circumstances whereby a combination was workable.
A "lead" non-executive director should be appointed and named in the annual report to ensure that no abuse of power took place.
Some shareholder groups were disappointed that the report included no requirement for institutional investors to publish their voting policies. However, it did say institutions should adopt a considered policy on voting their shares.
The Government declined to make an immediate decision on whether it would take action. Business organisations welcomed the report.
Comment, page 17
Sir Ron Hampel's main points
To steer the public debate on corporate governance back towards business prosperity as well accountability.
Unitary boards to be kept: two tier, continental-style boards rejected.
Non-executive directors to make up at least one-third of board.
Separation of chairman and chief executive posts preferred but not a firm rule.
No shareholder vote on director remuneration.
Companies should give business presentations at agms and use the meetings more constructively.
Proxy votes should be counted and declared ahead of agm votes.Reuse content