Professional negligence claims lead to annual elections for directors?

Published on 28 May 2010 under category: legal

Proposals to annually elect company directors have been criticised by several major firms. The Financial Reporting Council's (FRC) latest report states that annual elections could improve corporate governance and accountability.

Firms that have faced professional negligence claims could find that the proposal is relevant to them. Other changes to the Code include altering performance-related pay so it works with a transparent model of risk-management. Several major companies have criticised the moves, Accountancy Age has reported. BT, Tesco, Sainsbury and British Airways are among the companies that have said that a proposal to reduce the average three-year term of a director was likely to introduce short-termism. On the published paper, Baroness Hogg said: "Under my predecessors wise leadership, the FRC responded to the financial crisis by examining the questions it raised about corporate governance and thoroughly reviewing the code."

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