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A review of compliance with Cadbury

Article Abstract:

Recent literature is examined to determine the level of compliance with the recommendations of the Committee on the Financial Aspects of Corporate Governance headed by Sir Adrian Cadbury. The findings indicate a high level of compliance with the committee's recommendations for the creation of an Audit Committee with at least three non-executive directors on it and of a Remuneration Committee consisting wholly or mostly of non-executive directors which will examine the compensation of executive directors. There was also widespread adherence to the recommendation that corporate boards should have a minimum of three non-executive directions, and to the general belief that the roles of Chairman and CEO should be separated. However, there was a low level of compliance with the proposed creation of a Nomination Committee that seeks to clarify the board appointments process.

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The future for governance: the rules of the game

Article Abstract:

Corporate governance has become an important concept in British companies. Those involved in the governance of a corporate organization are required to follow certain rules that are imposed by external as well as internal sources. Among the external forces are laws, regulations, and codes of best practice. The opinions of investors and the public also hold sway in governance. Meanwhile, internal rules also exist and they come in the form of professional and company codes. However, personal responsibility has as much influence as the aforementioned rules. This burden of defining desirable conduct is carried by boards of directors but is also shared by shareholders, professional consultants, and the general public. Lastly, ethical customs should also be allowed to shape corporate governance decisions.

Evaluation

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The role of non-executive directors post-Cadbury

Article Abstract:

The role of corporate non-executive directors (NED) has evolved considerably since the establishment of the UK's Cadbury Committee which was formed to consider 'The Financial Aspects of Corporate Governance.' Most companies that comply with 'The Code of Best Practice' formulated by the committee employ NEDs who are not viewed as independent, contrary to official reports. Prospective NEDs are suggested mainly by the CEO or other Board members, with shareholders rarely involved in the search. Most companies consider the balance between the number of NEDs and executive directors more important than the number of NEDs and executive directors. They also view their NEDs' roles mainly as advisors and monitors.

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