Employers
believe government proposals to reform corporate governance will undermine the
role of company chairmen, according to a poll released today.
In
a government-commissioned review, former investment banker Derek Higgs called
for non-executive directors to have regular meetings with shareholders. He also
recommended a ban on company chairman heading the nominations committee,
following a series of boardroom scandals in the UK and US.
However,
eight out of 10 FTSE companies that responded to a CBI survey said the
proposals would undermine the role of chairman and their ability to run an
effective, unified board.
Higgs’
recommendation that an independent director chair the committee nominating
people to the board has been dismissed as unworkable by business. Higgs wanted
to strengthen the autonomy of non-executives, but 87 per cent of the 61
companies polled said that they were against the move.
"Business
backs the broad approach proposed by the report, but chairman have got to
allowed to run an effective unified board," said CBI director-general
Digby Jones.
"My
greatest fear is that the law of unintended consequences might stifle the
creativity and drive that characterises so much of what is good about UK
business.
"Disallowing
the chairman from chairmanship of the nominations committee is also seen as
running counter to the drive to maintain a strong unified board. This ban
should not apply.
"One-size-fits-all
will not be good for British business or wealth creation," he said.
