Developments in Corporate Governance and Stewardship 2016

An overview of the highlights from the report by the Financial Reporting Council.

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The Financial Reporting Council recently released their report on Developments in Corporate Governance and Stewardship 2016. The report comes alongside many other reports and reviews on the state of Corporate Governance in the UK such as the Corporate Governance reform Green Paper and the Business, Energy and Industrial Strategy (BEIS) Select Committee’s inquiry.

The report highlights 2016’s key developments in the areas of Corporate Governance, Culture and Stewardship.  

Corporate Governance

  • 90% of all FTSE 350 companies comply with all but a couple of the 54 provisions.
  • Compliance with all provisions has risen this year from 57% to 62%.
  • AGM season analysis indicates that investors have reduced support for remuneration resolutions, citing issues with transparency around links between pay and performance.
  • Small number of comprehensive reports on the viability statement.
    • Companies are encouraged to have more constructive reporting, including clearer information around timeframe, how the statement was reached and how analysis was performed.
  • Diversity and succession planning also need to be addressed in greater detail.
  • Consultation for BEIS comes off the back of enquiries into BHS and Sports Direct.
    • Focuses on executive pay, directors’ duties and board composition.
    • BEIS issued a public consultation in November around remuneration, large private company governance and how to strengthen the stakeholder voice.
  • Feedback from the FRC on how changes can be handled centre around use of a revised UK Corporate Governance Code and Guidance on the Strategic Report.
    • The FRC advises that additional powers would be needed for them to implement all recommendations.


  • Corporate Culture and the Role of Boards report released.
  • Low levels of public trust in business.
  • Asks companies to focus on culture and it’s long term value creation.
  • Feedback will be combined into the UK Corporate Governance revision.


  • Signatories now assessed in tiers on their reporting against the code.
  • Those in tier 3 will be removed from the list in the middle of the year and given the opportunity to improve their reporting.

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