Bosses irked by Bolkestein over governance code

By Peter Chapman

Date: 16/09/04

BOSSES in Europe have attacked the European Commission for ushering in "through the back door" a pan-EU corporate governance code to tighten controls on big companies.

The warning comes as Internal Market Commissioner Frits Bolkestein prepares to unveil in early October detailed recommendations on the role of non-executive directors and executive remuneration.

Changes to complex rules governing EU company law are also planned later this year.

The move is part of an effort to improve the way companies are run - in the wake of scandals such as the collapse of US energy trading company Enron and Italian milk firm Parmalat.

However, Jérôme Chauvin, head of company affairs at the EU employers group UNICE, told European Voice that the proposals were too prescriptive - and took scant notice of the views of industry.

Consultations on the proposals had been "rushed during the summer" with short deadlines that gave companies little opportunity to respond, he said.

Bolkestein wants governments to introduce in their national framework a set of detailed principles on the independence of non-executive directors. These would be derived from minimum standards to be used by listed companies.

On executive pay, the Dutch commissioner wants to raise transparency in directors' remuneration by disclosing remuneration policy for the next financial year and by unveiling the remuneration of individual directors in the preceding financial year.

Shareholders should also get more say in approving share-based remuneration schemes - for example, share options - for directors.

Commission recommendations are not mandatory for member states.

But Chauvin said industry bosses across the European Union "fear that it is going to be a kind of de facto legislation".

"In the end it is like creating a European code on corporate governance that the Commission said it did not want to establish," he added.

But Bolkestein's spokesman Jonathan Todd said: "We have undertaken extensive consultations on the basis of our corporate governance action plan - and taken account of the results of that."

Article previews European Commission recommendations on a corporate governance code, especially the role of non-executive directors and executive remuneration.

• Primary Source

European Commission: DG Internal Market: Company Law & Corporate Governance http://ec.europa.eu/comm/internal_market/company/index_en.htm

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