'Directors' know how' is a monthly article which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.
NAPF publishes its 2015 Corporate Governance Policy & Voting Guidelines
The National Association of Pension Funds (NAPF) has published its 2015 Corporate Governance Policy & Voting Guidelines. The guidelines aim to assist their members in promoting the long-term success of the companies in which they invest an ensuring that the board and management of these companies are held accountable to shareholders. Key changes include:
- A focus on individuals and succession: This year’s updated policy places much greater emphasis on the importance of individual responsibility, and in turn the role of shareholders in ultimately holding accountable those individuals they have elected to the board.
- A wider view of risk: The NAPF has highlighted the need for reputational risks, such as a company’s approach tax management, and emerging risks, such as those from cyber security and climate change, to be appropriately considered.
- Remuneration: The policy sets out more explicitly those issues that the NAPF thinks investors should consider carefully when they vote on the remuneration policy, the remuneration report, and the chair of the remuneration committee.
- Voting guidelines: The focus has moved from the Corporate Governance Code generally to the specific resolutions being voted on at an AGM. As a result, the guidelines have been reordered to to reflect the order that resolutions typically appear on an AGM agenda. The NAPF hopes that this will encourage shareholders to give more consideration to how they use their voting rights and subsequently to exercise their voting rights more coherently on all resolutions.
- Abstentions: The NAPF no longer advocate the use of abstentions as a general approach and place stronger emphasis on holding the individuals within the board to account on issues relevant to their area of responsibility.
- Integration of separate policy on smaller companies: The NAPF has rolled its separate policy on smaller companies into the main Policy & Voting Guidelines, which, as a result, now references the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Size Quoted Companies as a useful starting point for smaller companies seeking to emulate best practice.
New guidance stresses the role of the non-executive director in cyber security
The Department for Business, Innovation and Skills (BIS) published new guidance in December for non-executive directors to help them talk to board colleagues about cyber security risks. The guidance highlights the increased focus on risk management and that non-executive directors are well placed to ask probing questions in this area. The guidance has:
- general information about cyber security;
- questions non-executive directors should ask themselves about their company's approach to cyber security;
- questions non-executive directors should ask their board colleagues on cyber security;
- questions that non-executive directors should ask the audit and/or risk committee(s) on cyber security; and
- links to more guidance and advice, such as the Cyber Essentials Scheme and the Cyber-Security Information Sharing Partnership (CISP)