“A FTSE 100 company would like to know what other companies are planning in respect of directors’ re-election.
Provision B.7.1. of the UK Corporate Governance Code requires directors to be re-elected annually, however, Hermes, for example, are encouraging companies to explain if they do not consider this appropriate.”
Our view is that while the FRC had good reasons for proposing this change, the arguments are balanced and therefore the case for annual re-election is not proven. We intend to consult with key shareholders on this Code provision since we are minded not to adopt annual re-election at our AGM in January 2011.
Depending on how the issue is addressed by others over the next year, we will decide one way or the other for future AGMs.
Our Chairman’s initial thoughts were that he was happy to stand for annual re-election but saw no benefit in each and every director standing for re-election on an annual basis. If there is no measurable benefit, why increase the length and complexity of the AGM? I suspect we may not comply with the Code on this point given shareholders existing rights to remove directors.
Several of our NEDs are used to annual re-election from their other Boards and view this as something that doesn’t make any real difference one way or the other and therefore is not worth spending time on. We put everyone up for re-election at the 2010 AGM (even before the new Code was published).
There was a distinct lack of enthusiasm when I raised this at a BM last week. We will sit tigt and monitor the trend, but the feeling at the moment is we will explain rather than comply.
Our AGM will not be until next Summer. It is likely that we will comply with the Code.
We will bring in annual re-election this year. AGM is in October.
We consider that annual re-election need only start at the AGM held after the first financial year to which the Code applies, on the basis that the AGM relates to that preceding financial year. Both ABI and the NAPF will accept this approach, i.e. they will not recommend votes against companies that do not immediately comply with B.7.1 and put all directors up for re-election in 2011.
We shall be bringing in annual election of all directors at the 2011 AGM.
In the absence of any further developments in accepted practice, we intend to adopt as and when required to do so by the Code.
FTSE 250
We will be adopting this in 2011 – we do not see this as particularly onerous
We are early adopting the annual re-election provision as set out in the UK Corporate Governance Code, and changing our articles of association accordingly.
We adopted, as best practice, the annual re-election of directors 2-3 years ago and have not experienced the type of activisim regarding relections over this time to cause any concern.
As a company (just) outside the FTSE350 we do not have to comply with this requirement. I see little value in the requirement and will not be steering the board in that direction; this can be contrasted to the other new requirement of external facilitation of performance review at least every 3 years, which I shall be suggesting we adopt.
An interesting topic; would a company wish to put all directors up for election at one time if there was a threat or likelihood of corporate activity? If there is certainty and an announcement of the corporate activity then a company could explain the reason for non-compliance; if there was uncertainty, but something definitely ongoing behind closed doors, then failure to propose all directors for re-election could lead to speculation as to the reason. A mechanism by which companies could have flexibility, without causing speculation, would be welcome.
We are planning to comply by having all Directors stand for re-election. We do not feel that this will give rise to negative short term actions by our shareholders in their approach, despite the fact that we have communicated shareholder consulations will be taking place on some key issues and consider that this is not controversial for us.