Private firms in Britain to comply with first governance code

published from January 2020.

“They are just good common sense. We are not trying to reinvent any wheels,” Wates told Reuters.

But they are unlikely to prevent another collapse like BHS, Wates said. “If people are determined to do things, they will. What it will do is set out standards that people will hopefully aspire to.”

The six principles include having clear board member responsibilities, promoting the long-term, sustainable success of the company, and meaningful engagement with staff and having regard to their views when taking decisions.

They also touch on the sensitive issue of boardroom pay, saying it should be set at “appropriate and fair levels” to secure and retain high-quality directors and senior managers, and aligned with performance.

But the disclosure of pay ratios, or the difference in pay between chief executives and their average UK worker, would only be on a voluntary basis.

Pay ratio disclosures are mandatory for listed companies after a public outcry over bonuses being out of step with company performance.

“We want people to think about their remuneration in the round and articulate their philosophy. What you don’t want to do is put a price tag on your people as they could be recruited away from you,” Wates said.

Matthew Fell, deputy director-general of business lobby CBI, said the principles could aid robust decision-taking informed by strong engagement with staff, customers and owners.

The FRC will monitor how the new code is applied. (RTRS)