S

|
 
les

  
  
 

 
|easons for changes in UK Corporate
Governance Code and objects of analysis

|
 
of corporate governance
in UK banks and other
Huge losses in financial industry entities 
financial sector, ʹ 39 recommendations 
caused by financial (independent review  !"
crisis of the year 2008, ordered by UK Prime 
 
evoked    Minister)  
 
 


 
 
    
   
 and O

principles reflected |    

in the UK Corporate | |
 of 
Governance Code effectiveness 
of the Combined
Code
(regular review)
(

  

  
1

11/21/2010
àalker |ecommendations not included in 2010
CGC - SECTION B: EFFECTIVENESS_1
|ecommendation Possible reason
of non-adoption
͞3. The overall    #$%as a group on a FTSE 100- Strict time commitment
listed bank or life assurance company board should be greater than would affect flexibility factor
has been normal in the past. ....For several NEDs,     of the Code and will not
&     ''(!in a major bank board improve the quality of the
should be clearly indicated in letters of appointment͟ performance
"4. ....closer attention to the overall balance of the board in relation It was specific to financial
to the risk strategy of the business, taking into account the institution and was not to
experience, behavioural and other qualities of individual directors general industry.
and their   ! ) 
 
 . Such programmes should be designed to assure ... that
NEDs are equipped to engage proactively in BOFI board deliberation,
above all on 
 !.͟
͞5. The FSA͛s  
  #$%proposed for FTSE 100- It questions the role of FSA,
listed bank and life assurance company boards should involve Interference by FSA
questioning and assessment by one or more ... senior advisers͟

11/21/2010 2
àalker |ecommendations not included in 2010
CGC - SECT SECTION B: EFFECTIVENESS_2
|ecommendation Possible reason
of non-adoption
͞7. The chairman of a major bank should be expected to commit a àe do not think specific time
substantial proportion of his or her time, ** !+, commitment will improve the
to the business of the entity, with clear understanding from the outset quality of the performance, but the
that, in the event of need, the bank chairmanship role would have code has included sufficient time
priority over any other business time commitment͟ commitment by chairman.
͞8. ,  of a BOFI board should bring  * This recommendation is more

 ! &   and a track record of successful applicable for financial institutions
  capability in a significant board position.͟ and not general institution.

͞9. The chairman is  *   of the board, ensuring The current provision of the Code
its effectiveness in all aspects of its role͟ in regard to the chairman͛s
leadership is sufficient and does
not require amplification.
͞12. The board should undertake a formal and rigorous evaluation of This provision is implemented in
its performance, and that of committees of the board,  &   the Code in part. |eason for not full
   every second or third year.͟ inclusion is that the Board should
have the flexibility in evaluation
process.
11/21/2010 3
àalker |ecommendations not included in 2010
CGC - SECTION C: ACCOUNTABILITY
|ecommendation Possible reason
of non-adoption
͞13. , 
  *   and The Code already includes the
governance should confirm that a rigorous evaluation process has provision in regards of annual
been undertaken and describe the process for identifying evaluation reporting, and
the skills and experience required to address and challenge additional provision makes
adequately key risks and decisions that confront, or may confront, annual reporting process
the board.͟ more complicated.
͞23-26. The board of a FTSE 100-listed bank or life insurance This provision is generally
company should establish a board 
  separately from applicable for big size
the audit committee.͟ companies, that͛s why is not
the provision to be included
to the Code.

11/21/2010 4
àalker |ecommendations not included in 2010
CGC - SECTION D: |EMUNE|ATION
|ecommendation Possible reason
of non-adoption
29. Ensuring that the board remuneration committee has oversight of senior staff
|emuneration
30. Enhancing external reporting of the process for setting the performance objectives for
senior staff
31. |eporting of senior staff remuneration (aggregated in bands) by domestic firms
͞32. Ensuring comparable disclosure of senior staff remuneration (aggregated in bands) by
the UK subsidiaries of foreign companies There͛s no need
33. Changes to the structure of senior staff remuneration. Changes to the structure of senior for a separate
staff . committee to be
͞34. Senior staff to maintain minimum shareholdings in the firm͟ set up within the
Board
͞35. Ensuring the board risk committee provides advice on risk adjustments to performance
Objectives͟
͞36. |e-election requirement for board remuneration committee chair if the remuneration
report fails to secure 75% support
͞37. Disclosure of enhancement of termination benefits or the power to do so͟
͞38/39. Code of conduct for remuneration consultants and its use by remuneration
committees͟
11/21/2010 5