BUSINESS ANALYSIS: Boardrooms Square Up to Higgs ; the Higgs Report on Corporate Governance Continues to Stir Up Controversy in the City
Griffiths, Katherine, The Independent (London, England)
Christine Farnish, chief executive of National Association of Pension Funds
"It is a very good principle to make boards explain if they do not comply. There might be very good reasons for it, but it is right that they justify that to investors - we will have more transparency and we will be monitoring what goes on very closely. But it would be absolutely disastrous if companies just tick the boxes, what we need is an intelligent and pragmatic application of Higgs."
Colin Melvin, head of corporate governance at Hermes, the pension fund manager
"We think Higgs provides practical and pragmatic guidance on how boards might enhance their performance. We are very pleased that the review shares our view that non-executives can make a significant contribution on corporate governance."
Alastair Ross Goobey, chairman of the International Corporate Governance Network
"I think it's not revolutionary. Higgs mentions changing the architecture of corporate governance, but I'd say rather that it's changed the plumbing.
I don't think we should be overly concerned about the diminution of power that some chairmen think is going to occur. Every board relies on the chemistry of the boardroom and on the people involved at the time.
All individual observers believe that British corporate governance is the best in the world. But that's no reason for us to be complacent. There have been instances in the past when the interests of shareholders have been subsumed by the interests of management. This report strikes the right kind of balance to correct that."
David Howell, finance director of lastminute.com
"In general the Higgs review is positive because companies have the option to explain themselves if they are unable to adhere to the framework, unlike the much more prescriptive legislation in the States. One problem in that small-cap companies and smaller mid-cap companies will find it difficult to deal with some aspects of the report, specifically where they suddenly find additional or new non- executives from."
Christopher Rodrigues, chief executive of Bradford & Bingley
"Broadly speaking, the proposals are pretty good. They make corporate governance more visible, and they do allow you to act differently as long as you can fully explain why. Higgs is only looking at one part of corporate governance - the role of non- executives. Actually corporate governance is made up of three things. One is getting good non-execs, the second is creating a culture around the boardroom table that allows issues to be openly discussed and the third is finding a very good chairman."
Bob Dyrbus, finance director of Imperial Tobacco
"Overall it's not bad. What we're looking at is the evolution, not revolution, of corporate governance. The question mark is over the position of an independent director. Directionally it's fine - it's moving down the road to good governance. But we need to remember that Higgs himself said it was not a box ticking exercise. We've got to treat it in the spirit in which it was written, as a set of guidelines rather than rules."
John Sunderland, chief executive, Cadbury Schweppes
"Higgs requires companies to comply or explain. The code is not designed to be one size fits all but it allows companies to explain their situation."
Patricia Hewitt, secretary of state for trade and industry
The job of the company board has never been more important. The Government warmly welcomes the proposals in Derek Higgs' report and the important contribution it makes to boosting market and investor confidence. The recommendations reflect a high degree of consultation and consensus on what is needed to strengthen Britain's corporate governance regime."
Peter Montagnon, head of investment at the Association of British Insurers
It does imply profound change but there are a lot of useful recommendations, which we welcome. …