market tracker trend report...ukcg code and their anticipated impact on disclosures in a company’s...

Market Tracker | Trend Report Tracking the market: issues at the 2013 AGM

Lexis®PSL CORPORATE

March 2013

Market Tracker | Trend Report Tracking the market: issues at the 2013 AGM 1

IntroductionA number of significant developments in the last year may have an impact on a company’s 2013 AGM and the structure of its annual report and accounts. These include the introduction of a new version of the UK Corporate Governance Code, which now contains provisions on gender diversity and audit tendering, and applies to financial years beginning on or after 1 October 2012. There are also legislative reforms in relation to narrative reporting and executive remuneration that are expected to come into force on 1 October 2013.

Although many of these changes are not yet in force, companies have been encouraged to start complying with them as soon as possible. Whether proposing early compliance or not, companies should familiarise themselves with the changes now in order to prepare next year’s notice of AGM and annual reports and accounts in line with the new requirements and engage early with shareholders.

Tracking the market: issues at the 2013 AGM summarises the key recent developments and what they mean for you and your clients in the 2013 AGM season.

Contents UK Corporate Governance Code changes

Narrative reporting

Women on boards

Directors’ remuneration

Round up: other recent developments

Further reading

This report focuses on companies with shares that are listed on the Official List of the UK Listing Authority and traded on the Main Market of the London Stock Exchange (listed companies), which are subject to the UK Corporate Governance Code and other investor guidelines. However, it will also be relevant to AIM listed companies to the extent that they voluntarily comply with the corporate governance regime in the UK.

Defined termsABI Association of British Insurers

BIS The Department for Business, Innovation & Skills

FRC Financial Reporting Council

FSA Financial Services Authority

LTIP Long-term incentive plans

NAPF National Association of Pension Funds

PIRC Pensions Investment Research Consultants Limited

UKCG Code UK Corporate Governance Code


UK Corporate Governance Code changesThe FRC has published a new version of the UKCG Code, which applies to financial years beginning on or after 1 October 2012. This means that, for a company with a calendar financial year, the new version of the UKCG Code will apply to the year ending 31 December 2013.

This section of Tracking the market: issues at the 2013 AGM focuses on the key changes that the FRC have made to the UKCG Code and their anticipated impact on disclosures in a company’s annual report and accounts. This will be relevant not only to the few companies that must comply with the new version of the UKCG Code in the 2013 AGM season, but also those that choose to comply early, a step that has been encouraged by the FRC. Lexis®PSL Corporate has observed that a number of companies have already displayed early compliance.

For a company that does not need to, or chooses not to, comply with the new version of the UKCG Code until the 2014 AGM season, an early understanding of its provisions will ensure that the company is well-placed to engage with its investors on them and to comply effectively next year.

“ Early compliance with the new UK Corporate Governance Code encourages a company’s corporate culture to evolve at a faster rate and better governance should better protect shareholder value: it is a sign of a good chairman doing a good job.”

Edward Craft, Partner, Wedlake Bell LLP

Key recent developmentsIn addition to publishing the new version of the UKCG Code, the FRC has simultaneously published new versions of its UK Stewardship Code and its Guidance on Audit Committees, both of which apply to financial years beginning on or after 1 October 2012.

UK Stewardship Code The UK Stewardship Code supplements the UKCG Code and aims to enhance the quality of engagement between institutional investors and companies. It applies principally to those who manage assets on behalf of institutional shareholders, but institutional investors themselves are also encouraged by the FRC to comply with it. The UK Stewardship Code is applied on a ‘comply or explain’ basis.

In the new version of the UK Stewardship Code, changes have been made to:

•clarifytheresponsibilitiesofassetmanagersandassetownersforstewardshipandstewardshipactivitiesthatthey have chosen to outsource

•requireinvestorstoexplainmoreclearlyhowtheymanageconflictsofinterest,thecircumstancesinwhichtheywill take part in collective engagement and the use they make of proxy voting agencies, and

•encourageassetmanagerstohavetheprocessesthatsupporttheirstewardshipactivitiesindependentlyverified,to provide greater assurance to their clients

The FRC encourages all signatories to the UK Stewardship Code to review their policy statements from 1 October 2012, with a view to producing an updated statement as soon as is practical. Such policy statements set out how they have complied with the UK Stewardship Code or explain why they have chosen not to comply.

Guidance on Audit CommitteesThe FRC’s Guidance on Audit Committees covers the role and functions of the audit committee generally. It is intended to assist boards of directors in implementing the provisions of the UKCG Code dealing with audit committees (Section C.3) and to assist individual directors serving on audit committees in carrying out their role. Its provisions are not binding.

Among other things, the updated version considers how an audit committee may best comply with the disclosures it is required to make in accordance with the new version of the UKCG Code and, in particular, gives guidance on which issues that are considered by an audit committee in relation to a company’s accounts can be viewed as ‘significant’.

The FRC encourages companies to consider whether it would be beneficial to apply the new version of the Guidance on Audit Committees earlier than formally expected.


What does this mean for the 2013 AGM season?The changes to the UKCG Code are intended to increase accountability to, and engagement with, investors. As a result, they require a company to make new disclosures in its annual report and accounts and to consider the quality and effectiveness of its audit. They also require more meaningful explanations of non-compliance with any provision of the UKCG Code, which continues to apply on a ‘comply or explain’ basis.

If required to, or choosing to, comply with the new version of the UKCG Code in the 2013 AGM season:

•aFTSE350companymustputitsexternalauditcontractouttotenderatleasteverytenyears(subjecttotransitional provisions suggested by the FRC and described below), with the aim of ensuring a high quality and effective audit, whether from the incumbent auditor or from a different firm (C.3.7)

•acompany’sauditcommitteemustprovideshareholderswithinformationinaseparatesectionoftheannualreport describing its work in discharging its responsibilities, including the significant issues it has considered in relation to the company’s accounts, how those issues were addressed, how it has assessed the effectiveness of the external audit process and information on the appointment and tenure of the external auditor (C.3.8)

•theboardofacompanymustconfirminitsannualreportthatitconsiderstheannualreportandaccountstakenas a whole to be fair, balanced and understandable and to provide the information necessary for shareholders to assess the company’s performance, business model and strategy (C.1.1); the audit committee may be asked to advise on this (C.3.4) and the board should establish arrangements that will enable it to ensure that the information presented is fair, balanced and understandable (Supporting Principle to section C1)

•acompanymustdiscloseintheannualreporttheidentityofcertainexternaladvisersandstatewhethertheyhave any other connection with the company (executive search consultants, external facilitators of board evaluations and remuneration consultants) (B.2.4, B.6.2, D.2.1)

•acompanymustexplain,andreportonprogressagainst,theirpoliciesandanymeasurableobjectivesonboardroomdiversity (B.2.4, Supporting Principle to section B.6) (see the Women on boards section of this report), and

•acompanymustprovideafullexplanationtoshareholdersofanynon-compliancewiththeUKCGCode;thatexplanation should set out any background, provide a clear rationale for the action the company is taking, describe any mitigating actions taken to address any additional risk and maintain compliance with the UKCG Code and, if the non-compliance is intended to be limited in time, indicate when the company expects to comply (paragraph 3 in the Comply or Explain section)

Transitional provisions on the tender of audit contractsThe FRC recognises that the audit market could be disrupted if a large number of companies chose to tender their audit contract in the first year that the new version of the UKCG Code applies. As a result, it has suggested that a company should time the tender of its audit contract to tie in with the rotation of its audit engagement partner (this should occur every five years), except where a company has put its audit contract out to tender or changed audit firm since 2000, when the first tender required by the new version of the UKCG Code might be deferred until the next rotation of audit engagement partner.

These transitional arrangements are not binding and the FRC has made it clear that a company should put its audit contract out to tender whenever it feels it is appropriate to do so, while its shareholders should feel free to request this. In any event, the FRC encourages a company to state in their annual report whether or not they anticipate putting the audit contract out to tender in due course.

Grant Thornton highlighted in its research paper The Chemistry of Governance: Analysing the compliance efforts of UK business that the average tenure of a company’s auditor is currently 33 years, with 3 out of 4 companies giving little or no information about past or future intentions regarding their auditor.

Companies giving little/no information on past/future intentions

Companies giving information on past/future intentions

25%

75%


What next?UKCG CodeThe FRC intends to consider the need for any further changes to the UKCG Code on the issues of remuneration reporting and voting once the Government has finalised the Enterprise and Regulatory Reform Bill (see the Directors’ remuneration section of this report), in light of any developments in shareholder and company practice.

In addition, the FRC recognises that changes may need to be made to those UKCG Code provisions that require certain information to be disclosed in the annual report when the Government introduces its proposed legislation on narrative reporting in April 2013 (see the Narrative reporting section of this report).

Guidance on the tender of audit contractsThe FRC will be holding discussions with companies, investors and auditors to consider whether it would be useful to issuesupplementaryguidanceontheprovisioninthenewversionoftheUKCGCoderequiringaFTSE350companytoput its external audit contract out to tender every ten years. However, no timescale for these discussions or for any such guidance has been announced.

European legislation on the tender of audit contractsThere are proposals for European legislation that would introduce mandatory audit rotation and mandatory tendering for audit appointments, which it is proposed will apply to ‘public interest entities’. This would include any listed company and a company active in certain financial services.

TheEuropeanParliament’sCommitteeonLegalAffairsiscurrentlyproposingthatauditorsshouldrotateevery25years,whereas the European Commission has proposed mandatory rotation every six years (with some exceptions) and a 4 year cooling off period applying before the auditor may be re-engaged. European legislation was expected to be adopted in 2013, although this now appears unlikely.

UKCG Code: ‘comply or explain’ in practice

Did not comply with UKCG Code 2012

Did not comply with the UKCG Code 2012 but plan to do so in 2013

Complied with UKCG Code 2012

51%

28%

21%

Percentage of companies complying with the UKCG Code

Source: Grant Thornton - The Chemistry of Governance: Analysing the compliance efforts of UK business

Percentage of companies giving detailed reasons to support non-compliance with the UKCG Code

Source: Grant Thornton - The Chemistry of Governance: Analysing the compliance efforts of UK business

2011

2012

0% 20% 40% 60% 80%


What does ‘comply or explain’ mean? The ‘comply or explain’ approach underlies corporate governance in the UK. A company that is required to, or chooses, to apply the provisions of the UKCG Code should include in its annual report:

•astatementofhowithasappliedthemainprinciplesoftheUKCGCode,inamannerthatenablesshareholderstoevaluate how they have been applied, and

•astatementastowhetherornotthecompanyhascompliedthroughoutthefinancialyearwithallrelevantUKCGCode provisions, setting out the provisions, if any, it has not complied with, the period of non-compliance and the company’s reasons for non-compliance

‘Comply or explain’ recognises that departures from the UKCG Code provisions may be justified in particular circumstances, if good governance can be achieved by other means. A condition of making such departures is that the reasons for them should be explained clearly and carefully to shareholders, who may wish to discuss the position with the companyandwhosevotingintentionsmaybeinfluencedasaresult.

There is currently a debate in Europe on the future of ‘comply or explain’. The FRC believes Brussels may be trying to move to a more prescriptive form of regulation on corporate governance, which would mean regulators rather than shareholders deciding whether an explanation is sufficiently complete. The FRC’s view is that the current system should be made to workbetterratherthanintroduceprescriptiveregulation,whichwouldremovetheflexibilityinherentinthe‘complyorexplain’ approach.

Two recent reports have strongly supported the ‘comply or explain’ approach to corporate governance in the UK and provided further guidance to any company seeking to provide a meaningful explanation of non-compliance:

•aFRCreport,Whatconstitutesanexplanationundercomplyorexplain?,hasidentifiedfourelementsthatshouldbe included in an explanation of non-compliance; it conclusions have been included in the new version of the UKCG Code, and

•areportbytheABI,Complyorexplain:investorexpectationsandcurrentpractices,hashighlightedsixcriteriathatwill assist a company in preparing an explanation of non-compliance


Narrative reportingChanges to the narrative reporting regime are expected to come into force on 1 October 2013, and will be applicable to companies with financial years ending on or after that date. Whilst the new regime will have minimal impact on the 2013 AGM season, companies should be aware of the changes and should prepare themselves for complying with the new requirements.

This section of Tracking the market: issues at the 2013 AGM tells you what you need to know about recent developments and their impact on disclosures in the 2013 annual report and accounts.

Key recent developmentsProposals to change the narrative reporting regimeIn October 2012, following two consultations on the future of narrative reporting, BIS issued the draft Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (Regulations). The Regulations will overhaul the existing framework for the structure and content of a company’s annual report, with the main objective of making the narrative reporting regime simpler, clearer and more focused. The final version of the Regulations is awaited.

The new narrative reporting regime – key changesTheRegulationswillamendPart15oftheCompaniesAct2006.Thekeychangesproposedare:

•anewstandalonestrategicreviewwillreplacetheexistingbusinessreview

•quotedcompanies(definedinsection385oftheCompaniesAct2006)willhavetoincludeadditionaldisclosures in their strategic review, including information on the company’s strategy and business model, information on human rights issues and gender diversity disclosures, and

•anewrightforcompaniestodeliverthestrategicreporttoshareholdersinplacedofsummaryfinancialstatements, and

•reduceddisclosurerequirementsinthedirectors’report

Financial Reporting Review Panel (FRRP) Report 2012In September 2012, the FRRP of the FRC issued its annual report, in which it reported its findings of a review of 326 sets of reports and accounts issued by public and large private companies. Overall, the FRRP found the general quality of narrative reporting to be good, but it still had some concerns about the quality of reporting by some smaller listed and AIM quoted companies. The FRRP warned against the inclusion of bullet point lists and boilerplate language, and highlighted the importance of using clear descriptions and adequate explanations.

What does this mean for the 2013 AGM season? •Fornow,companiesshouldbecomplyingwiththeusualstatutoryandregulatoryframeworkwhenproducingtheir

annual reports. However, they should be aware of the upcoming changes to the narrative reporting regime and should be prepared to review the structure of their annual reports once the new law comes into force.

•Companiesshouldensurethattheirreportingdisclosuresareofsufficientqualityanddetail,incompliancewiththe FRRP’s recommendations.

What next? •ThefinalversionoftheCompaniesAct2006(StrategicReportandDirectors’Report)Regulations2013is

expected to be published soon. It is anticipated that the Regulations will come into force on 1 October 2013.

•NewguidanceisexpectedfromBISandFRCinSpring2013onthecompilingthestrategicreviewsectionoftheannual report.


2 August 2010 BIS issues its first consultation on the future of narrative reporting

27 March 2012 Government’s response to the September 2011 consultation

18 October 2012 BIS issue report summarising proposals and setting out draft Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013

15 November 2012 Deadline for giving comments on the draft Regulations

1 October 2013 Expected date that the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 come into force

19 September 2011 BIS issues a further consultation on the future of narrative reporting


Women on boardsSince the Davies Report, Women on Boards, was released in February 2011, the topic of female board representation has rarely left the headlines. 2012 saw a number of developments relating to gender diversity, including changes to the UKCG Code and recommendations from both the ABI and NAPF. There is also an ongoing debate over proposed EU legislation to introduce a 40% objective for female representation on boards. The issue of women on boards is likely to continue to be a hot topic for companies in 2013.

This section of Tracking the market: issues at the 2013 AGM tells you what you need to know about these recent developments and their impact on disclosures in the 2013 annual report and accounts.

Key recent developmentsUKCG CodeA new provision in the UKCG Code (B.2.4) requires a company that complies with it to disclose the details of its board’s policy on diversity (including gender diversity). It also requires a company to give a description of any measurable objectives set for implementing the policy and progress on achieving those objectives (which is in line with the recommendations of the Davies Report to disclose targets for increasing the number of women appointed to the board).

The new edition of the UKCG Code (and therefore this new provision) applies to companies with accounting periods starting on or after 1 October 2012, but the FRC has encouraged companies to comply with it as soon as possible. In practice, Lexis®PSL has observed that a number of companies have started to comply with this new provision and are including disclosures in their annual reports on their diversity policy.

Views of institutional shareholder bodiesThe ABI and NAPF have both issued recent guidance in which they express strong views about what they expect to see from companies in relation to board diversity.

The ABI’s Report on Board Effectiveness, issued in December 2012, makes the following recommendations:

•acompanyshoulddisclosethestepsitistakingtopromoteadiversityofperspectiveinitsboardroom •acompanyshouldseektoprovidemoreforward-lookingandcandiddisclosuresonthestepsitistakingtoensure

it has the right balance of skills and experience in its boardroom •acompanyshouldshowitisresponsivetothevoluntaryapproachtogenderdiversityandshouldprovide

meaningful disclosures about the board appointment process, the barriers it faces in appointing women to its board, and how it seeks to address this issue

•acompanyshouldbegindisclosingtheproportionofwomennotonlyonitsboard,butalsoinseniormanagementand in the whole organisation prior to the formal requirement to do so under the UKCG Code for years ending on or after 1 October 2013

•acompanyshouldrecogniseitsroleinsupportingwomentoovercomethebarrierstheyfaceinrisingtothetopofthe management structure, and

•acompanyshoulddevelopanddisclosetheinitiativesithasinplacetodevelopwomeninitsorganisationandthey impact they are having

NAPF issued its updated Corporate Governance Policies and Voting Guidelines in December 2012, which state that shareholders will expect companies to explain what steps they are taking to bring diversity to their boardroom, particularly gender diversity. The guidelines contain a new recommendation that the board’s diversity policy should include a description of its policy on professional, international and gender diversity. NAPF states that it is opposed to diversity quotas, but it does expect companies to set targets for gender diversity and to demonstrate progress towards achieving them.


“ ...companies, led by their chairmen, need to show that they are responsive to the voluntary approach to improving gender diversity. They should ensure they provide meaningful disclosures on the board appointment process, the barriers they face in appointing women to their board, and how they will address gender diversity, as part of the wider consideration of ensuring a diversity of perspective on the board.”

Source: ABI Report on Board Effectiveness, December 2012

What does this mean for the 2013 AGM season? •TocomplywiththeDaviesReportrecommendations:

–aFTSE350companyshouldsetoutthepercentageofwomenitaimstohaveonitsboardsin2013and2015initsannualreport,and

–alistedcompany(notjustacompanyintheFTSE350)shoulddiscloseinitsannualreporttheproportionof women on its board, women in senior executive positions and female employees in the whole organisation

•Acompanywithafinancialyearendpriorto1October2013shouldconsiderwhetheritwillcomplywiththeprovisions of the new version of the UKCG Code early (bearing in mind that a number of companies have already displayed early compliance). If they decide to do so, they should include a disclosure in their annual report on the company’s diversity policy, describe their measurable objectives for implementing that policy and report on progress on achieving such objectives.

•AcompanyshouldbeawareoftheNAPFandABIrecommendationsondiversity.Inparticular,acompanyshouldensure that detail and the quality of its disclosures is in line with the ABI guidelines

Diversity disclosures – market practice examples“ At Sage we value the aims and objectives of The Davies Report on Women on Boards. In considering appointments to the Board and to senior executive positions, it is our policy to evaluate the skills, experience and knowledge required by a particular role with due regard for the benefit of diversity on the Board and at senior management level and make an appointment accordingly. The Board of Sage currently comprises 29% women and we would expect to maintain a similar balance through 2013 to 2015. It is of the utmost importance to maintain strong leadership at Sage and we will therefore continue to appoint only the most appropriate candidates. Our top leadership population is 24% female; the majority of our core operating companies have top leadership teams in excess of 20% female; and 46% of our total workforce profile is female.”

Source: The Sage Group Annual Report, 2012

“The Nomination Committee’s objectives are to:

•achieveatleast25%femalerepresentationamongtheBoard’smembershipby2015;

•ensurethatatleasthalfoftheinitialapplicantpoolforBoardappointmentsconsistsofwomen;

•engageexecutivesearchfirmswhohavesigneduptothevoluntaryCodeofConductongenderdiversityand best practice;

•reportannuallyagainsttheseobjectivesandotherinitiativestakingplacewithintheCompanywhichpromote gender, international, ethnic and other forms of diversity; and

•reportannuallyontheoutcomeoftheBoardevaluation,thecompositionandstructureoftheBoardaswellas any issues and challenges the Board is facing when considering the diverse make-up of the Company.”

Source: TUI Travel Annual Report, 2012


What next?On 14th November 2012, the European Commission announced proposals for new legislation that will set an objective for at least 40% of the non-executive directors of all European publicly listed companies to be women by 2020. There will be sanctions for those failing to meet the objective. The measures have been met by strong opposition by the UK and some other Member States, who have argued that the issue of diversity on boards should be dealt with at a national level and that voluntary measures currently in place have been working. However, these objections have been disregarded and the legislative proposals are proceeding through the European Parliament.

It is very unlikely that the proposals for EU legislation will progress quickly enough to have any impact in 2013, but it is worth keeping a watch on the ongoing debate throughout the year. If and when 40% objectives are introduced, there will be a big impact on companies in the UK.

Rise in % of women on FTSE 100 boards since Davies Report

Davies Report, February 2011 (figures from 2010)

Cranfield Report, February 2012

BoardWatch Report, November 2012

0% 5% 10% 15% 20%

12.5%

15.6%

17.3%

Risein%ofwomenonFTSE250boardssinceDaviesReport

Davies Report, February 2011 (figures from 2010)

Cranfield Report, February 2012

BoardWatch Report, November 2012

0% 3% 6% 9% 12%

7.8%

9.6%

12%


Directors’ remunerationLast AGM season, the investors in a number of companies expressed their discontent with executive remuneration arrangements by voting against the directors’ remuneration report in what has become known as the ‘shareholder spring’ of 2012. The Government’s proposals for new legislation to give shareholders greater power over directors pay, combined with the continued negative media scrutiny over executive compensation, mean that remuneration will remain at the top of the agenda in the 2013 AGM season.

This section of Tracking the market: issues at the 2013 AGM helps you navigate the proposed legislative changes and how this will impact on company disclosures in the annual report and accounts.

Key recent developmentsExecutive pay reformsFollowing public consultations on the issue of executive remuneration, the Government published the Enterprise and Regulatory Reform Bill (ERR Bill) with the main objectives of enhancing shareholder engagement and strengthening links between directors’ pay and performance. The ERR Bill, which is making its way through parliament and is expected to come into force on 1 October 2013, will introduce a binding shareholder vote on directors’ remuneration policies.

The ERR Bill: key changesThe ERR Bill splits the directors remuneration report into two parts:

•The policy report: this will outline future remuneration policy and forecast payments. Shareholders will be given a binding vote at least once every three years on the policy report.

•The implementation report: this which will summarise actual payments to directors in the last financial year. Shareholders will continue to have an annual advisory vote on the implementation report.

The transitional provisions in the ERR Bill provide that remuneration payments and exit payments made before the end of the first financial year after the changes come into force (or the date the first policy report is approved, whichever is earlier) will not be subject to the new requirements.

The proposed content requirements for each report are as follows:

Policy report:

•Futurepolicytable

•Servicecontracts

•Scenarios

•Relativeimportanceofspendonpay

•Exitpaymentpolicy

•Statementofconsiderationsofconditionselsewhere in the company and group

•Statementofconsiderationofshareholderviews

Implementation report:

•Asinglefigurefortotalremuneration

•Lossofofficepayments

•Variablepayawarded

•Comparisonofoverallperformanceandpay

•Statementofdirectors’shareholding

•Disclosureinrelationtoremunerationconsultants

•Statementofshareholdervoting


Number of remuneration report resolutions with greater than 20% opposition

FTSE 100

FTSE250

0% 5% 10% 15% 20% 25%

19%

19%

6%

2012

2011

21%

The figures show otherwise…

Despite the media hype last AGM season reporting widespread shareholder riots, statistics from investor advisory body PIRC show that in fact in 2012 shareholder dissent had declined from the previous year.

Source: PIRC

ABI Principles of RemunerationIn November 2012, the ABI published its revised Principles of Remuneration (Principles). The ABI states that it expects a number of companies will want to start reporting in accordance with the new regime in advance of the ERR Bill coming into force, so for this purpose they have issued preliminary guidance in relation to the new remuneration reporting framework. Key guidance includes:

•remunerationreportsshouldprovidecontext;investorswantcompaniestoavoidboilerplateornarrowlylegalisticdisclosures

•investorsfindcomparativedisclosuresofremunerationpotentialagainstpeersinformativeandthisshouldbeincluded as a matter of course, even though there is no requirement to do so under the current legislative proposals

•investorswillexpectthepolicytabletobedisclosedannually(eventhoughundertheERRBillshareholdersvoteonly once every three years on the policy report), and

•whendecidingonthelevelofdetailprovidedinthepolicytable,companiesneedtostriketherightbalancebetweenprovidingenoughflexibilityforcompaniestoattractandretaintherightemployeesandforinvestorstohave sufficient detail to ensure the policy has sufficient boundaries

Views of other institutional shareholder bodiesNAPF Corporate Governance Policy and Voting Guidelines: The NAPF Guidelines set out best practice principles in relation to the levels of remuneration and the procedure for developing policy on executive remuneration. In its updated Guidelines, issued in December 2012, NAPF also voices its support for the reforms to the remuneration policy being introduced by the Government. It states that some companies may want to adopt some or all of the new regulations ahead of their formal introduction in October 2013, in which case such companies can expect shareholders to review compliance rigorously but to acknowledge that best practice is still evolving.

Report on remuneration principles for building and reinforcing long-term business success: In February 2013, NAPF, Hermes Equity Ownership Services and a number of other key organisations in the pension funds industry issued a report on remuneration principles for building and reinforcing long-term business success. The report sets out the following four remuneration principles:

•managementshouldmakeamateriallong-terminvestmentinthesharesofthebusinessestheymanage

•payshouldbealignedtolong-termsuccessandthedesiredcorporateculturethroughouttheorganisation

•payschemesshouldbesimple,understandableforbothinvestorsandexecutives,andensurethatrewardsreflectlong-termreturnstoshareholders,and

•remunerationcommitteesshouldfullyexplainandjustifyhowtheirdecisionsoperatetodeliverylong-termbusiness success

PIRC UK Shareowner Voting Guidelines 2013: In its most recent guidelines, issued in February 2013, PIRC has vehemently opposed the current concept of long-term incentive plans, branding them neither long term nor a means of incentivising and advising shareholders to vote against them. PIRC has said that it will oppose any new LTIP based schemes, as well as inappropriate existing ones. PIRC has also stated that it will not support any resolutions on remuneration reports or chair of the remuneration committee where any audit firm is also the remuneration adviser.


TherehasbeenadeclineinthenumberofLTIPsbeingintroducedorsignificantlyamendedbyFTSE350since2012.Lexis®PSL Corporate wonders whether the cause could be uncertain economic conditions or pressure from investor advisory bodies like PIRC.

Source: KPMG

* Performance share plans, deferred share bonus plans, share option plans, co-investment plans and other long-term investment plans

Total plans introduced or significantly amended by FTSE 350 companies*

2010 2011 2012

50

40

30

20

10

0

What does this mean for the 2013 AGM season? •Companiesshouldcontinuetopreparetheirdirectors’remunerationreportsinlinewithexistinglegislationand

bearing in mind current guidelines, including the NAPF Corporate Governance Policy and Voting Guidelines, the PIRC UK Shareowner Voting Guidelines and the report issued by NAPF and others on remuneration principles for building and reinforcing long-term business success.

•ThereformsintheERRBillwillnothaveabigimpactonthe2013AGMseasonastheywillonlycomeintoforce,and therefore will only apply to companies with a financial year ending on or after, 1 October 2013. However, some companies may choose to adopt these measures earlier than this, in which case they should review and, where appropriate, comply with the guidance in the ABI Principles of Remuneration.

•EvenifacompanychoosesnottocomplywiththeprovisionsoftheERRBillearly,itshouldfamiliariseitselfwiththe new regime and start preparing to change the structure of its remuneration report so that it is well prepared for the 2014 AGM season.

•CompaniesshouldalsobeartheERRBillreformsinmindwhendraftingservicecontractsorlettersofappointment post October 2013 to ensure that any provisions on payment acknowledge that this is dependent on shareholder approval. In addition, companies will need to bear the new policy report in mind when recruiting new directors and discussing remuneration.

What next? •ThefinalversionoftheERRBillisawaited.Thelegislationisduetocomeintoforceon1October2013.

•TheFRCindicatedthatitislikelythattheUKCorporateGovernanceCodewillalsobeamendedtoreflecttheERRBill changes in due course. It will consult on this once the ERR Bill has been finalised.

“ In relation to the shareholder spring and the issue of directors’ remuneration, it is clear that greater engagement with major investors is likely to be key to avoid the risk embarrassing defeats or forced director resignations at company meetings.”

Edward Craft, Partner, Wedlake Bell LLP


Round up: other recent developmentsThis section rounds up other recent developments and items of interest that companies should bear in mind for the 2013 AGM season, particularly when drafting their AGM notice and annual report and accounts.

Updated NAPF Corporate Governance Policies and Voting GuidelinesThe updated NAPF Guidelines, issued in November 2012, include greater emphasis on companies:

•havingaclearpolicyforimprovedboarddiversity

•havinganenhancedauditcommitteereport,includingastatementonre-tenderingpolicy,and

•simplifyingtheirremunerationpolicies,withgreaterfocusonholdingmoresharesforlonger

ABI Report on Board EffectivenessIn December 2012, the ABI issued its updated Report on Board Effectiveness. Key findings in the ABI’s report are:

•whilstthereisno‘onesizefitsall’approach,anessentialpartofthechairman’sroleistocreatetherightboarddynamic between board members

•therehasbeenamarkedimprovementinthediversityofboardcompositionandthenumberofcompaniesmakingdiversitydisclosuresintheannualreportsofFTSE350companies,butthereisstillroomforimprovement,particularly in relation to the appointment of women as executive directors and the quality of companies’ diversity disclosures

•successionplanningisanarearequiringimprovement,withmostdisclosurestendingtobeminimal,backwardlooking and expressed in boilerplate language, and

•thenumberofFTSE350companiescarryingoutexternalboardevaluationshasrisen,butcompaniesareconcerned about the lack of experience, credibility and independence of the available practitioners to carry out evaluations

PIRC UK Shareowner Voting Guidelines 2013In February 2013, PIRC issued the latest edition of its UK Shareholder Voting Guidelines 2013. PIRC summarises the 2013 Guidelines as placing ‘a greater emphasis on the management of shareholders’ capital’ and taking ‘a tougher approach on remuneration issues’. Key features of the 2013 Guidelines include:

•PIRC’sdecisiontoopposetheintroductionofallnewLTIPs,followingitsconclusionthatLTIPsare‘notlongtermand they do not incentivise’

•PIRC’sconclusionfromthe‘shareholderspring’of2012isthat‘remunerationcommittees,particularlyinthelargest companies, have failed to work’

•PIRC’scommentsthatadebateshouldbehadastowhetherthe‘complyorexplain’approachoftheUKCorporate Governance Code ‘has reached the end of its useful life or needs to be refocused’, and

•PIRC’srecommendationthatshareholderopposetheadoptionofacompany’sreportandaccounts,andalsotheelection of both audit committee members and the financial director responsible for the accounts in question, ‘where it is clear that the company’s adherence to IFRS has led to a failure of the accounts to provide the true and fair view’

FRC consultation on Turnbull guidance delayedOn 8 January 2013, the FRC confirmed that it will be delaying the expected consultation on its paper, Internal control: revised guidance for directors (or the Turnbull guidance, as it is commonly known), until the second quarter of 2013.

The Turnbull guidance sets out best practice on risk management and internal control for UK listed companies. It was first issued in 1999andwaslastrevisedin2005.TheFRCproposedalimitedreviewoftheTurnbullguidancein2012,butthisnevertookplace.

The FRC has stated that it has delayed the consultation to enable it to pick up, in the suggested amendments to the Turnbull guidance, any relevant issues that arise out of the separate consultation on the FRC’s paper, Going concern and liquidity risk: guidance for directors of UK companies.


FRC consults on implementing going concern recommendationsOn 30 January 2013, the FRC published a consultation paper, Implementing the Recommendations of the Sharman Panel: Revised Guidance on Going Concern and revised International Standards on Auditing (UK and Ireland). The consultation paper has been issued in response to the recommendations of a panel of inquiry led by Lord Sharman (Sharman Panel), issued in June 2012.

In March 2011, the FRC commissioned the Sharman Panel to examine, in the light of the financial crisis, the challenges faced by directors, management and auditors where a company is facing going concern and liquidity risks and to consider how such challenges should be met in the future.

The Sharman Panel recommended, among other things, that the FRC review its existing going concern guidance and that the FRC should consider moving auditing in the UK towards inclusion of an explicit statement in the auditor’s report as to whether the auditor has anything to add to, or emphasise, in relation the disclosures made by the directors on about the robustness of their going concern assessment process and its outcome.

The consultation paper has annexed to it the FRC’s proposed:

•GuidanceonGoingConcern2013(GoingConcernGuidance)andSupplementforBanks(BankSupplement),and

•amendmentstotheInternationalStandardsonAuditing(UKandIreland)(ISAs)

The consultation is aimed at taking the view of stakeholders as to whether these are practical and appropriate and explains the extent to which they meet the recommendations of the Sharman Panel.

The deadline for responses to the consultation is 28 April 2013. It is expected that the updated Going Concern Guidance, Bank Supplement and ISAs will be issued by 30 June 2013 and that they will apply to financial years beginning on or after 1 October 2012, with earlier adoption being encouraged by the FRC.

Listing Rules changes to control a dominant shareholderTheFSAhasconsulted,inCP12/25EnhancingtheeffectivenessoftheListingRegime,onamendmentstotheListingRulesto strengthen the corporate governance requirements for any company with a dominant shareholder.

The proposed amendments include the introduction of the concept of a ‘controlling shareholder’, being a person (alone or acting in concert with another person) holding:

•30%ormoreofthesharesofacompanyoritsparent

•30%ormoreofthevotingpowerinacompanyoritsparent,or

•sufficientsharesorvotingpowerinacompanyoritsparenttoexercisesignificantinfluenceoverthecompany

Under the amended Listing Rules, a company with a controlling shareholder would be subject to a number of additional requirements to ensure that it is managed independently of that shareholder. Such a company would be required to:

•putanagreementinplacetoregulatetherelationshipbetweenthecompanyanditscontrollingshareholder,which must meet certain content requirements (relationship agreement)

•complywiththerelationshipagreementonanongoingbasis

•putanymaterialchangestotherelationshipagreementtoanindependentshareholdervote

•includeacopyoftherelationshipagreement(oralinktowhereitcanbefound)initsannualreport

•incorporateinitsannualreporteither:

– a statement by its directors that the company has complied with the relationship agreement throughout the financial year, or

– a description of the company’s failure to comply with the relationship agreement and a confirmation that the UK Listing Authority has been informed of such non-compliance

•maintainaboardwith:

– a majority of directors who are independent of its controlling shareholder,

– a chairman and directors who are independent of the controlling shareholder and who together make up half the board, and

– operate a dual voting procedure in relation to the appointment of independent directors


The dual voting procedure for the appointment of independent directors would require two separate resolutions for the appointment of each director; one resolution of all the company’s shareholders and one resolution of its independent shareholders. If either resolution was defeated, it would not be possible to vote on a further resolution to elect the relevant director for 90 days, but this further resolution, once proposed, would only require a simple majority of all shareholders to be passed.

The consultation on these amendments to the Listing Rules closed on 2 January 2013 and the FSA is expected to publish feedback on them early this year.

FRC acts to enhance audit communicationsThe FRC has recently taken steps to make the information provided by a company’s auditor more useful to investors. It has issued:

•revisedInternationalStandardsonAuditing(Auditing Standards), effective for audits of financial statements for periods commencing on or after 1 October 2012, and

•aconsultationpaperonchangestoISA(UKandIreland)700,Theauditor’sreportonfinancialstatements(ISA 700 Consultation)

The revised Auditing Standards are intended to give effect to proposals in the FRC’s report, Effective Company Stewardship: Next Steps, and to support changes in the most recent versions of the UK Corporate Governance Code and Guidance for Audit Committees.

The changes to the Auditing Standards include requirements for:

•theauditortocommunicatetotheauditcommitteeanyinformationthattheauditorbelievestheauditcommittee will need in order to understand the significant professional judgments made in the audit

•theauditortoreport,byexception,iftheboard’sstatementthattheannualreportisfair,balancedandunderstandable is inconsistent with the knowledge acquired by the auditor in the course of performing the audit, or

•theauditortoreport,byexception,ifthemattersdisclosedinthereportfromtheauditcommitteedonotappropriately address matters communicated by the auditor to the audit committee

The ISA 700 Consultation has been published in response to claims that auditor’s reports are not informative or useful, particularly for investors. The proposed changes to ISA (UK and Ireland) 700 will require an auditor to disclose information about an audit, within the auditor’s report itself.

The proposed changes to ISA (UK and Ireland) 700 will require an auditor’s report to:

•describethoseassessedrisksofmaterialmisstatementthatwereidentifiedbytheauditor,whichhadthegreatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team

•provideanexplanationofhowtheauditorappliedtheconceptofmaterialityinplanningandperformingtheaudit,and

•provideasummaryoftheauditscope,includinganexplanationofhowthescopewasresponsivetotheassessedrisks of material misstatement and the auditor’s application of the concept of materiality, as disclosed in the auditor’s report

The deadline for responses to the ISA Consultation is 30 April 2013. It is expected that the amended ISA (UK and Ireland) 700 will be issued by 30 June 2013 and will take effect for financial periods commencing on or after 1 October 2012.


Further reading

Lexis®PSL Corporate

UK Corporate Governance Code changesFRC publishes new UK Corporate Governance Code and UK Stewardship Code http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-442Y/FRC-publishes-new-UK-Corporate-Governance-Code-and-UK-Stewardship-Code

FRC reports high level of compliance with Corporate Governance and Stewardship Codes http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/579H-D4C1-F186-44C2/FRC-reports-high-level-of-compliance-with-corporate-governance-and-stewardship-codes

ABI report on comply or explain: investor expectations and current practices http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5787-89X1-F186-42YS/ABI-report-on-comply-or-explain%3A-investor-expectations-and-current-practices

Comply or explain: FRC seeks to improve quality of explanations http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-4012/Comply-or-explain%3A-FRC-seeks-to-improve-quality-of-explanations

Narrative reportingBIS publishes draft regulations setting out changes to narrative reporting http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56V8-DH51-F186-42DF/BIS-publishes-draft-regulations-setting-out-changes-to-narrative-reporting

BIS set to delay implementation of new reporting framework for UK companies http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-41MR/BIS-set-to-delay-implementation-of-new-reporting-framework-for-UK-companies

BIS consults on a new reporting framework http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-41H5/BIS-consults-on-a-new-reporting-framework

Government proposal to split annual report narrative into two sections http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-410H/Government-proposal-to-split-annual-report-narrative-into-two-sections-

Women on boardsHouse of Lords EU Sub-Committee considers evidence on gender balance in the boardroom http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-413N/House-of-Lords-EU-Sub-Committee-considers-evidence-on-gender-balance-in-the-boardroom

House of Lords EU Sub-Committee launches report on Women on Boards http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/571M-DBT1-F186-44S2/House-of-Lords-EU-Sub-Committee-launches-report-on-Women-on-Boards

Women on boards: proposals for EU legislation announced http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5722-F361-F186-4334/Women-on-boards%3A-proposals-for-EU-legislation-announced

Directors’ remunerationNAPF and major pension funds and investors urge rethink on boardroom pay to align more closely with long-term business performance http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57P6-1551-F186-43DN/NAPF-and-major-pension-funds-and-investors-urge-rethink-on-boardroom-pay-to-align-more-closely-with-long-term-business-performance

Updated ABI Principles of Remuneration published http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/574M-FNF1-F186-409M/Updated-ABI-Principles-of-Remuneration-published

http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-442Y/FRC-publishes-new-UK-Corporate-Governance-Code-and-UK-Stewardship-Codehttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-442Y/FRC-publishes-new-UK-Corporate-Governance-Code-and-UK-Stewardship-Codehttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-442Y/FRC-publishes-new-UK-Corporate-Governance-Code-and-UK-Stewardship-Codehttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/579H-D4C1-F186-44C2/FRC-reports-high-level-of-compliance-with-corporate-governance-and-stewardship-codeshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/579H-D4C1-F186-44C2/FRC-reports-high-level-of-compliance-with-corporate-governance-and-stewardship-codeshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/579H-D4C1-F186-44C2/FRC-reports-high-level-of-compliance-with-corporate-governance-and-stewardship-codeshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5787-89X1-F186-42YS/ABI-report-on-comply-or-explain%253A-investor-expectations-and-current-practiceshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5787-89X1-F186-42YS/ABI-report-on-comply-or-explain%253A-investor-expectations-and-current-practiceshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5787-89X1-F186-42YS/ABI-report-on-comply-or-explain%253A-investor-expectations-and-current-practiceshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-4012/Comply-or-explain%253A-FRC-seeks-to-improve-quality-of-explanationshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-4012/Comply-or-explain%253A-FRC-seeks-to-improve-quality-of-explanationshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56V8-DH51-F186-42DF/BIS-publishes-draft-regulations-setting-out-changes-to-narrative-reportinghttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56V8-DH51-F186-42DF/BIS-publishes-draft-regulations-setting-out-changes-to-narrative-reportinghttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-41MR/BIS-set-to-delay-implementation-of-new-reporting-framework-for-UK-companies%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-41MR/BIS-set-to-delay-implementation-of-new-reporting-framework-for-UK-companies%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-41MR/BIS-set-to-delay-implementation-of-new-reporting-framework-for-UK-companies%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-41H5/BIS-consults-on-a-new-reporting-frameworkhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-41H5/BIS-consults-on-a-new-reporting-frameworkhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-410H/Government-proposal-to-split-annual-report-narrative-into-two-sections-http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55KM-JDS1-F186-410H/Government-proposal-to-split-annual-report-narrative-into-two-sections-http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-413N/House-of-Lords-EU-Sub-Committee-considers-evidence-on-gender-balance-in-the-boardroom%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-413N/House-of-Lords-EU-Sub-Committee-considers-evidence-on-gender-balance-in-the-boardroom%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-413N/House-of-Lords-EU-Sub-Committee-considers-evidence-on-gender-balance-in-the-boardroom%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/571M-DBT1-F186-44S2/House-of-Lords-EU-Sub-Committee-launches-report-on-Women-on-Boardshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/571M-DBT1-F186-44S2/House-of-Lords-EU-Sub-Committee-launches-report-on-Women-on-Boardshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/571M-DBT1-F186-44S2/House-of-Lords-EU-Sub-Committee-launches-report-on-Women-on-Boardshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5722-F361-F186-4334/Women-on-boards%253A-proposals-for-EU-legislation-announced%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5722-F361-F186-4334/Women-on-boards%253A-proposals-for-EU-legislation-announced%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57P6-1551-F186-43DN/NAPF-and-major-pension-funds-and-investors-urge-rethink-on-boardroom-pay-to-align-more-closely-with-long-term-business-performance%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57P6-1551-F186-43DN/NAPF-and-major-pension-funds-and-investors-urge-rethink-on-boardroom-pay-to-align-more-closely-with-long-term-business-performance%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57P6-1551-F186-43DN/NAPF-and-major-pension-funds-and-investors-urge-rethink-on-boardroom-pay-to-align-more-closely-with-long-term-business-performance%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/574M-FNF1-F186-409M/Updated-ABI-Principles-of-Remuneration-publishedhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/574M-FNF1-F186-409M/Updated-ABI-Principles-of-Remuneration-published


Enterprise and Regulatory Reform Bill amended in House of Lords http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NR-2R61-F186-449K/Enterprise-and-Regulatory-Reform-Bill-amended-in-House-of-Lords

FRC publishes report proposing companies report a single composite figure for directors’ remuneration http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-41KM/FRC-publishes-report-proposing-companies-report-a-single-composite-figure-for-directors%27-remuneration

FRC to consult on executive remuneration http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-40NK/FRC-to-consult-on-executive-remuneration

Enterprise and Regulatory Reform Bill published http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55YB-2791-F186-42XF/Enterprise-and-Regulatory-Reform-Bill-published

Round up: other recent developmentsFRC issues consultation paper on implementing the recommendations of the Sharman Panel http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57MP-J0B1-F186-412Y/Update%3A-FRC-issues-consultation-paper-on-implementing-the-recommendations-of-the-Sharman-Panel

FRC delays consultation on the Turnbull guidance http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57FT-16M1-F186-40M1/FRC-delays-consultation-on-the-Turnbull-guidance

FRC revises auditing standards to enhance communications to audit committees and auditor reporting: http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-43HJ/FRC-revises-auditing-standards-to-enhance-communications-to-audit-committees-and-auditor-reporting

FRC consults on proposals to make the auditor’s report more useful: http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NJ-B8C1-F186-42KD/FRC-consults-on-proposals-to-make-the-auditor%27s-report-more-useful

FSA consults on changes to the Listing Rules to enhance effectiveness of the regime: http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56PV-P2T1-F186-42FJ/FSA-consults-on-changes-to-the-Listing-Rules-to-enhance-effectiveness-of-the-regime

http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NR-2R61-F186-449K/Enterprise-and-Regulatory-Reform-Bill-amended-in-House-of-Lordshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NR-2R61-F186-449K/Enterprise-and-Regulatory-Reform-Bill-amended-in-House-of-Lordshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NR-2R61-F186-449K/Enterprise-and-Regulatory-Reform-Bill-amended-in-House-of-Lordshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NR-2R61-F186-449K/Enterprise-and-Regulatory-Reform-Bill-amended-in-House-of-Lordshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NR-2R61-F186-449K/Enterprise-and-Regulatory-Reform-Bill-amended-in-House-of-Lordshttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-40NK/FRC-to-consult-on-executive-remuneration%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/5618-9691-F186-40NK/FRC-to-consult-on-executive-remuneration%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55YB-2791-F186-42XF/Enterprise-and-Regulatory-Reform-Bill-published%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/55YB-2791-F186-42XF/Enterprise-and-Regulatory-Reform-Bill-published%20http://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57MP-J0B1-F186-412Y/Update%253A-FRC-issues-consultation-paper-on-implementing-the-recommendations-of-the-Sharman-Panelhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57MP-J0B1-F186-412Y/Update%253A-FRC-issues-consultation-paper-on-implementing-the-recommendations-of-the-Sharman-Panelhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57MP-J0B1-F186-412Y/Update%253A-FRC-issues-consultation-paper-on-implementing-the-recommendations-of-the-Sharman-Panelhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57FT-16M1-F186-40M1/FRC-delays-consultation-on-the-Turnbull-guidancehttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57FT-16M1-F186-40M1/FRC-delays-consultation-on-the-Turnbull-guidancehttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-43HJ/FRC-revises-auditing-standards-to-enhance-communications-to-audit-committees-and-auditor-reportinghttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-43HJ/FRC-revises-auditing-standards-to-enhance-communications-to-audit-committees-and-auditor-reportinghttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56P1-0CT1-F186-43HJ/FRC-revises-auditing-standards-to-enhance-communications-to-audit-committees-and-auditor-reportinghttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NJ-B8C1-F186-42KD/FRC-consults-on-proposals-to-make-the-auditor%2527s-report-more-usefulhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/57NJ-B8C1-F186-42KD/FRC-consults-on-proposals-to-make-the-auditor%2527s-report-more-usefulhttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56PV-P2T1-F186-42FJ/FSA-consults-on-changes-to-the-Listing-Rules-to-enhance-effectiveness-of-the-regimehttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56PV-P2T1-F186-42FJ/FSA-consults-on-changes-to-the-Listing-Rules-to-enhance-effectiveness-of-the-regimehttp://www.lexisnexis.com/uk/lexispsl/corporate/document/391386/56PV-P2T1-F186-42FJ/FSA-consults-on-changes-to-the-Listing-Rules-to-enhance-effectiveness-of-the-regime


External links:ABI - Principles of Remuneration, November 2012 http://www.ivis.co.uk/ExecutiveRemuneration.aspx

ABI Report on Board Effectiveness http://www.ivis.co.uk/pdf/abi%20report%20on%20Board%20effectiveness%202012%20-%20final.pdf

BIS consultation - the future of narrative reporting: a consultation, 2 August 2010 https://www.gov.uk/government/consultations/the-future-of-narrative-reporting-a-consultation

BIS consultation – the future of narrative reporting: a further consultation, 19 September 2011 https://www.gov.uk/government/consultations/the-future-of-narrative-reporting-a-further-consultation

BIS report – the future of narrative reporting: a new structure for narrative reporting in the UK, October 2012 http://www.bis.gov.uk/assets/BISCore/business-law/docs/F/12-979-future-of-narrative-reporting-new-structure.pdf

BoardWatch,rateofnewfemaleappointmentstoFTSE100andFTSE250,November2012 http://www.boardsforum.co.uk/boardwatch.html

Comply or explain: investor expectations and current practices, December 2012 http://www.abi.org.uk/Publications/65367.pdf

CP12/25EnhancingtheeffectivenessoftheListingRegimeandfeedbackonCP12/2: http://www.fsa.gov.uk/static/pubs/cp/cp12-25.pdf

Cranfield University, The Female FTSE board report 2012, February 2012 http://www.som.cranfield.ac.uk/som/dinamic-content/research/documents/2012femalftse.pdf

Effective Company Stewardship: Next Steps: http://www.frc.org.uk/getattachment/79cd68e0-5138-4199-9ec6-a124e40f93b0/Effective-Company-Stewardship-Next-Steps.aspx

European Commission resources on the reform of the audit market, last updated November 2011 http://ec.europa.eu/internal_market/auditing/reform/index_en.htm

Final report and recommendations of the Sharman Panel, June 2012 http://www.frc.org.uk/getattachment/591a5e2a-35d7-4470-a46c-30c0d8ca2a14/Sharman-Inquiry-Final-Report.%20aspx%5D

FRC consultation paper, revision to ISA (UK and Ireland) 700: http://www.frc.org.uk/getattachment/d24bb652-e319-46a4-add5-793d518a035b/Consultation-Paper-Revision-to-ISA-(UK-and-Ireland.aspx

FRC Guidance on audit committees, September 2012 http://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance/UK-Corporate-Governance-Code.aspx

FRC Guidance, Developments in Corporate Governance 2012, December 2012 http://www.frc.org.uk/getattachment/47293b70-bd65-485c-bbcd-d9a63688b87d/Developments-in-Corporate-Governance-in-2012.aspx

FRCGuidance,Whatconstitutesanexplanationunder‘complyorexplain’?,February2012 http://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance/UK-Corporate-Governance-Code.aspx

FRRP’s 2012 report http://www.frc.org.uk/getattachment/f46d075e-7d0b-439c-aaf6-d557de55f93f/Financial-Reporting-Review-Panel-Annual-Report-2012.aspx

Grant Thornton report, The chemistry of governance: a catalyst for change, December 2012 http://www.grant-thornton.co.uk/Global/Publication_pdf/Corporate_Governance_Review_2012.pdf

Implementing the Recommendations of the Sharman Panel: Revised Guidance on Going Concern and revised International Standards on Auditing (UK and Ireland) http://www.frc.org.uk/getattachment/f1b20d17-151f-49ec-a556-6756a4893205/Sharman-Implementation-Consultation-Paper.aspx

http://www.ivis.co.uk/ExecutiveRemuneration.aspxhttp://www.ivis.co.uk/pdf/abi%20report%20on%20Board%20effectiveness%202012%20-%20final.pdfhttps://www.gov.uk/government/consultations/the-future-of-narrative-reporting-a-consultation%20https://www.gov.uk/government/consultations/the-future-of-narrative-reporting-a-further-consultation%20http://www.bis.gov.uk/assets/BISCore/business-law/docs/F/12-979-future-of-narrative-reporting-new-structure.pdf%20http://www.boardsforum.co.uk/boardwatch.htmlhttp://www.abi.org.uk/Publications/65367.pdfhttp://www.fsa.gov.uk/static/pubs/cp/cp12-25.pdfhttp://www.som.cranfield.ac.uk/som/dinamic-content/research/documents/2012femalftse.pdfhttp://www.frc.org.uk/getattachment/79cd68e0-5138-4199-9ec6-a124e40f93b0/Effective-Company-Stewardship-Next-Steps.aspxhttp://www.frc.org.uk/getattachment/79cd68e0-5138-4199-9ec6-a124e40f93b0/Effective-Company-Stewardship-Next-Steps.aspxhttp://ec.europa.eu/internal_market/auditing/reform/index_en.htmhttp://www.frc.org.uk/getattachment/591a5e2a-35d7-4470-a46c-30c0d8ca2a14/Sharman-Inquiry-Final-Report.aspxhttp://www.frc.org.uk/getattachment/591a5e2a-35d7-4470-a46c-30c0d8ca2a14/Sharman-Inquiry-Final-Report.aspxhttp://www.frc.org.uk/getattachment/591a5e2a-35d7-4470-a46c-30c0d8ca2a14/Sharman-Inquiry-Final-Report.aspx%5Dhttp://www.frc.org.uk/getattachment/d24bb652-e319-46a4-add5-793d518a035b/Consultation-Paper-Revision-to-ISA-%28UK-and-Ireland.aspxhttp://www.frc.org.uk/getattachment/d24bb652-e319-46a4-add5-793d518a035b/Consultation-Paper-Revision-to-ISA-%28UK-and-Ireland.aspxhttp://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance/UK-Corporate-Governance-Code.aspxhttp://www.frc.org.uk/getattachment/47293b70-bd65-485c-bbcd-d9a63688b87d/Developments-in-Corporate-Governance-in-2012.aspxhttp://www.frc.org.uk/getattachment/47293b70-bd65-485c-bbcd-d9a63688b87d/Developments-in-Corporate-Governance-in-2012.aspxhttp://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance/UK-Corporate-Governance-Code.aspxhttp://www.frc.org.uk/getattachment/f46d075e-7d0b-439c-aaf6-d557de55f93f/Financial-Reporting-Review-Panel-%20Annual-Report-2012.aspxhttp://www.frc.org.uk/getattachment/f46d075e-7d0b-439c-aaf6-d557de55f93f/Financial-Reporting-Review-Panel-%20Annual-Report-2012.aspxhttp://www.grant-thornton.co.uk/Global/Publication_pdf/Corporate_Governance_Review_2012.pdfhttp://www.frc.org.uk/getattachment/f1b20d17-151f-49ec-a556-6756a4893205/Sharman-Implementation-Consultation-Paper.aspxhttp://www.frc.org.uk/getattachment/f1b20d17-151f-49ec-a556-6756a4893205/Sharman-Implementation-Consultation-Paper.aspx


NAPF and Hermes Equity Ownership Services Remuneration Principles http://www.napf.co.uk/PressCentre/NAPFbuzz/~/media/Policy/Documents/0290-Hermes-EOS-NAPF-Pay-Principles.ashx

NAPF Corporate Governance Policy and Voting Guidelines 2012 http://www.napf.co.uk/PolicyandResearch/DocumentLibrary/~/media/Policy/Documents/0277_Corporate_governance_policy_and_voting_guidelines_an_NAPF_document.ashx

PIRC website http://www.pirc.co.uk/publications

UK Corporate Governance Code, September 2012 http://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-September-2012.aspx

UK Stewardship Code, September 2012 http://www.frc.org.uk/getattachment/e2db042e-120b-4e4e-bdc7-d540923533a6/UK-Stewardship-Code-September-2012.aspx

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