You can read Anthony’s letter published in the FT (subscription applies) or below:
The research by academics at Lancaster University ('Negligible' link between CEO pay and investor value boosts case for shake up, 28 December) raises challenging questions for instance on how to set the criteria for executive bonuses but it would be best for any review to look at corporate governance in its broader context.
It will be a quarter of a century next year since the publication of the Cadbury Report and the development of the UK's first corporate governance code. Progress has been made on a number of areas since then but it would be timely for a Corporate Governance Commission to be set up to look at reforms needed to enable companies to achieve long term sustainable success which benefits all their direct stakeholders and wider society.
The Commission would build on the work of the parliamentary inquiry underway and the recent governmental Green Paper on corporate governance reform and should be made up of representatives of all key stakeholders- independent and executive directors, other employees, investors , consumers and civil society.
It would have a full agenda: the merits of companies having an inspiring purpose and clearly articulated values; board composition; setting the right 'tone from the top'; engagement with and the fair treatment of stakeholders including setting remuneration across the business; ensuring investors have due regard to the interests of the ultimate beneficiaries of the shares they hold; the promotion of innovation and building the societal licence to operate.
Remuneration has dominated the dialogue in the UK between boards and investors for the last twenty years since the publication of the Greenbury Report. For the next two decades it will be in the interests of business and the society of which it is an integral part for the discussions to range more widely and more deeply.
Head of Board Practice