Corporate Governance Changes in UK Companies Between 1988 and 1993

Abstract

In the UK, recently, there has been an intense debate about what constitutes good corporate governance. This paper presents the results of a retrospective postal survey into the nature of corporate governance structures in UK companies. The objective of this paper is to isolate the extent to which key corporate governance innovations are being adopted in the boardrooms of UK companies. The main findings can be summarised as follows: (i) 77 per cent of the sample of quoted companies separated the role of chief executive officer and chairman in 1993 compared to 57 per cent in 1988; (ii) 94 per cent of quoted companies operated remuneration committees in 1993 as compared to 54 per cent in 1988; (iii) the incidence of audit committees among companies has doubled between 1988 and 1993 whilst the incidence of nomination committees has trebled; (iv) in apparent contradiction of the Institutional Shareholders’ Committee recommendation, of those companies that operated remuneration committees in 1993, 40 per cent had the top executive director as a committee member. Overall the picture that emerges is of radical change in governance innovation since the late 1980s.