Code up the nose
DIRECTORS ALL over the country are wondering what to do about the Cadbury Code of Corporate Governance. One answer is to comply by going on each oth- ers' boards, for extra fees. An alternative reaches me from Arlen, the electrical engi- neering company chaired by Sir Campbell Fraser. Arlen's directors have reported to their shareholders as follows: 'The Stock Exchange now requires companies either to comply with the Code or to explain why these rules are not complied with. We do not feel it necessary to place in this report a specific response. Directors are those indi- viduals appointed by the owners of a com- pany to look after it. It is naive to suppose that a set of rules can be a substitute for the owners' basic responsibility for the conduct of their appointees. It is up to shareholders to control directors by exercising an owner's right to remove, or to decline to re- elect, any director whose performance is not satisfactory. Like people, companies are made the same way but differ from each other. It is impossible to create a sin- gle set of rules which works for each indi- vidual company. It is up to the directors to run the business in the best interests of shareholders, and we expect to be mea- sured by you, the owners of the company, in how we conduct business and carry on our duties.' Besides, the directors say, complying would cost money, and businesses have to comply with too many silly and costly regula- tions already. For this model report I am sending the genial Sir Campbell my Cadbury Award, a jumbo bar of Fruit and Nut.
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