At the top of the website of Campaign for Merit in Business there’s a quotation from the American economist Milton Friedman (1912 – 2006), an adviser to Ronald Reagan and Margaret Thatcher:
Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible.
Since 2010, a Conservative-led coalition and later Conservative governments have gone further than Labour governments had historically, in bullying major companies into increasing the proportion of women on their boards, despite clear evidence of a causal link between increasing female representation on boards, and corporate financial decline. Senior businessmen including many FTSE100 chairmen have been at the forefront of initiatives to increase female representation on boards. A piece in yesterday’s Times:
[Sir Win Bischoff, chairman, Financial Reporting Council, mangina]
Companies will have to consult their workforces and impose tougher standards over executive pay under proposals to change corporate governance rules.
The Financial Reporting Council is planning a formal requirement for companies to take soundings from their employees and to have a greater regard for a wider range of stakeholders than in the past.
The “comprehensive review” of the the accounting watchdog’s code also includes proposals to extend the amount of time that executives have to wait to receive share awards from three to five years and to make companies say what they would do if they encountered significant shareholder opposition to executive pay policies and awards.
Chairmen of remuneration committees should have at least 12 months’ previous experience and companies will have to make a bigger effort to have more boardroom diversity, including more women, [J4MB emphasis] people from ethnic minorities and social backgrounds.
Britain’s corporate governance code has been in place since 1992. Its core principles of “comply or explain” will remain. The reforms will be subject to consultation until February 28.
Sir Win Bischoff, the council’s chairman, said that a revised code would be essential for restoring trust in business.
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