The Financial Reporting Council bowed to pressure from the City yesterday to water down Derek Higgs' review of British boardrooms by making it clear some of the report's most controversial proposals would not be included in the Combined Code.
After a meeting of the FRC's 30-strong board yesterday, the body said it would set up a working party to consider the report on the role of non-executive directors further, before amending the Code by the end of the year. But the body made clear that a number of Mr Higgs' suggestions that have caused consternation among business figures would not be backed by the working party, which will be headed by the president of the Confederation of British Industry, Sir John Egan.
Recommendations that the group will not take forward include making non-executive directors step down after six years on the board unless they give a special explanation for why they should stay on. The FRC has also rejected the idea that company chairmen should not be head of the nomination committee – a proposal Mr Higgs has also now said he would be happy to see scrapped.
Sir Bryan Nicholson, the FRC's chairman, said everyone behaved in a "statesmen-like" way at the meeting. This was despite the fact that it was attended by prominent critics of the Higgs report, including Sir Nigel Rudd, chairman of Kidde, and Sir John Bond of HSBC, as well as by Mr Higgs himself.
The FRC attempted to strike a balance between the different groups. It said it would take forward the suggestion that senior independent directors should chair occasional meetings of the other non-executives without the chairman being present, despite protests from some business leaders that this would be divisive.
The FRC, an independent body, was asked by the Department of Trade and Industry to incorporate Mr Higgs' work on bolstering the role of non-executives and Sir Robert Smith's report on audit committees in the Combined Code by 1 July. That date has now been put back until later in the year.Reuse content