Most firms still fail Cadbury test

ONLY 16 per cent of FT-SE 100 companies meet the Cadbury Committee's code of best practice on disclosing board earnings in their annual reports, according to a survey by the Monks Partnership, an independent firm of remuneration advisers.

The analysis, Disclosing Board Earnings - A Guide to Good Practice, published today, shows that there has been a significant improvement since the publication of the draft code last May, when only 12 companies complied with all four guidelines. These are disclosure of total emoluments and the pay of the chairman or highest paid director (both with the performance element shown separately), explanation of incentives and information about the remuneration committee.

The survey, which also includes more than 70 examples of good practice from named companies' annual reports, is based on reports in circulation in the 12 months to February 1993. Monks expects there to be a marked increase in disclosure in reports for the period to December 1992, which are just starting to appear.

Simon Rodwell, a Monks director, said: 'Our experience shows that a clear and timely statement on board remuneration policy, including the basis of any incentive payments, can prevent misunderstandings at a later date. Whilst post-Cadbury annual reports have shown a clear improvement, compliance is far from being 100 per cent.'

The weak areas were disclosure of total emoluments, which was done by 43 companies; explaining the basis of incentive plans, done by 46; and the separation of any performance element in the remuneration of a chairman or highest paid director, done by 28.

By contrast, 81 per cent of companies provided information on remuneration committees.