Higgs to face fresh onslaught from CBI

Katherine Griffiths
Saturday 08 March 2003 01:00
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Derek Higgs' review of UK boardrooms will be subjected to a renewed attack on Monday in the form of a CBI survey detailing criticisms of his corporate governance proposals from FTSE 100 chairmen.

The CBI's long-awaited findings are expected to detail views which have already been aired by some company bosses such as Sir Nigel Rudd, the chairman of the glass maker Pilkington, Donald Gordon, the chairman of the shopping centres group Liberty International and Gerry Robinson, the chairman of Allied Domecq.

Other chairmen of companies who have not been prepared to voice concerns in public have also spoken privately to the CBI, reinforcing the common themes of concern among business figures with the Higgs review.

The CBI will point out there is support in the City for Mr Higgs' voluntary approach to boardroom rules rather than a prescriptive set of boxes to tick, as is found in the United States.

But the CBI will stress that Higgs' proposal to elevate the role of the senior non-executive director to act as a counterweight to the chairman on the board is a major source of concern.

Another area of disagreement is over the maximum time non-executives should spend on company boards, with many City figures opposed to Mr Higgs' suggestion that they should not serve for more than six years.

A significant number of businesses are also concerned at the suggestion that chief executives should not step up to be chairmen of the same companies. They also believe that Mr Higgs is misguided in his view that one person cannot adequately chair two FTSE 100 companies at the same time.

The fresh attack on the Higgs review will not be welcomed by the Government, which rushed out a glowing response to the document when it was published in January. Patricia Hewitt, the Secretary of State for Trade and Industry, is understood to be standing firm behind the work and wants to see it added to the Combined Code by 1 July.

However, the Financial Reporting Council (FRC), the independent body which is responsible for the Code, has been listening closely to the views of the City and is considering watering down Mr Higgs' suggestions in some areas.

The body may still take the view that if companies do not like what Mr Higgs has said, they can simply explain why they are taking a different course.

But it is more likely that the FRC will soften the language of the final draft of the proposals, due to be published in the second half of May.

On some of the main areas of concern the new Code may encourage companies to consider making certain changes rather than telling them that by not doing so they are in breach of it.

The Financial Reporting Council may also make some of the stipulations less demanding, such as allowing non-executives to serve for longer than six years and reducing the number of key jobs the senior non-executive director can hold.

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