The majority of companies in the UK’s FTSE 350 Index have adopted annual elections for the full board, according to data from governance adviser PIRC.
So far this year, 69 percent of FTSE 350 companies have consented to annual elections, notes PIRC, whose internal data show adoption among FTSE 100 companies is even higher, at 80 percent.
Annual elections are set out as best practice under the new UK Corporate Governance Code. UK-listed companies are required to report on how they have applied the code under a comply-or-explain system.
Discussing the issue in its newsletter this week, PIRC explains how a number of UK blue chips that opposed the introduction of annual elections to the code – including GlaxoSmithKline, HSBC and Tesco – have now adopted the practice.
The advisory firm says this shows major companies will comply with the code regardless of whether they agree with its guidelines.
‘But this in turn poses a question about comply or explain,’ PIRC points out. ‘If companies like GSK, HSBC and Tesco really don’t think annual elections are worthwhile, and may even do damage to the company, why adopt them rather than not comply and provide an explanation?’
