Regulation and Investor Expectations: A corporate governance insight paper ahead of the 2020 AGM season

Ever since the financial crisis of 2008, the level of scrutiny on Boards of Directors and companies has grown, with the focus on corporate governance becoming particularly pronounced over the past five years. The 2018 iteration of the new UK Code included a number of substantive changes.

The growing capabilities of institutional investors and the broadening of the definition of governance from the Financial Reporting Council has dictated that 2019 was a year of significant change in a number of key areas.

FTI and CGlytics conducted an analysis of key areas of the new UK Code to determine the extent of that impact on UK and Irish companies. While the embedding of workforce engagement practices and disclosure has been subject to slower developments, guidance on pensions and Chair tenure have immediately influenced company and investor thinking – the result of which has been significant reductions in pensions for executive Directors in the FTSE and a sharp drop in average Chair tenure on both the FTSE and the ISEQ. However, despite the extent of change among Chairs, the level of gender diversity in those positions remains very low. The paper also includes wider potential risks for companies as the 2020 AGM season approaches.