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The FRC has taken steps to improve confidence in the way companies are governed, including the disclosure of long-term viability statements, improved risk reporting and greater focus on boardroom diversity. The FRC’s report on corporate culture highlighted the role the board should play in shaping, embedding and assessing corporate behaviours and culture.
Compliance with the principles of the UK Corporate Governance Code remains high; however, when boards choose not to follow provisions too many explanations are of poor quality. This suggests that some boards still need to do more than pay lip service to the needs of their shareholders and other stakeholders. The FRC believes more focussed reporting by boards on how they discharge their responsibilities is necessary and has asked for more oversight powers from Government to help achieve this.
The FRC’s report includes analysis of the 2016 AGM season which showed generally reduced support for remuneration resolutions and concern about a lack of transparency in the link between executive pay and performance. The FRC welcomes the Government’s focus on this important issue and the need for companies to respect their shareholders’ views.