Boardroom shake-up watered down

BOSSES of Britain's biggest companies heaved a sigh of relief as a proposal to restrict the maximum term non-executive directors can serve on company boards has been extended from six to nine years.

The proposal, put forward in the Higgs Report in January, could have sparked off a massive head-hunting exercise had it been incorporated into a new code of corporate governance on how British public companies should be run.

After a two-month review the Financial Reporting Council, chaired by former Post Office chief Sir Bryan Nicholson, publishes the final version of the new code today.

The decision to amend the proposal is part of a wider scaling back on recommended changes to the code contained in the Higgs Report and an audit committee report from Sir Robert Smith.

The recommendations come into force on 1 November. Moves to clamp down on so-called rewards for failure have been retained, but other Higgs proposals have been amended:

Chairmen can continue to chair committees set up to approve who should join their company's board. Higgs wanted to ban this practice.
Chief executives can become chairman of the same company provided they first consult with shareholders. Higgs wanted to end this.
Meetings between the senior non executive director and other non-execs without the chairman present restricted to once a year, curbing Higgs' recommendations.