UK: FRC report considers impact and implementation of the UK Corporate Governance and Stewardship Codes

The Financial Reporting Council has published a report titled Developments in Corporate Goverance 2012 - The impact and implementation of the UK Corporate Governance and Stewardship Codes: see here (pdf). There is much of interest in this report, away from headline findings that half of all FTSE350 companies complied fully with the UK Corporate Governance Code 2010. In particular, the report notes that "market developments create a challenging environment for stewardship" (p. 11) and concerns are raised with regard to the quality of companies' 'comply or explain' disclosures. It is noted, for example, that some companies simply stated that their governance arrangements were appropriate without further elaboration. The FRC also states that it is likely to consult in 2013 on possible changes to the UK Corporate Governance Code 2012 with regard to the procedures by which directors' remuneration is set. With regard to remuneration, the FRC notes that despite references to a 'shareholder spring' this year, suggesting a sea change in investor attitudes, there was not in fact a widespread revolt against excessive remuneration.