In response to this public pressure, in 1991 the then Conservative government under Prime Minister John Major established the Cadbury Committee and its successors. The remit of these bodies was to establish guidelines under which companies and public bodies should operate. These guidelines were not to be enshrined in law (especially for companies), but rather to be promulgated as "best practice" under which industries would regulate themselves.
Perhaps the most telling case was that of the Mirror Group Newspapers pension fund. Over a period of time the company's pension fund had been plundered of some 400,000,000. The money was used for a variety of purposes, including the enhancement of the MGN's share value, and the personal use of the Chairman, Robert Maxwell.
Of great concern also were the performances of directors of newly privatized utilities. In many cases those same individuals who had been at the helm of state owned bodies now came to have their salaries massively increased, (in some cases three or four-fold) simply because, in the eyes of the public, their enterprise was now privately rather than publicly owned.
As a result of these and other in...
The committee and its successors produced guidance and codes of practice, aimed at reducing or eliminating such malpractice. The Cadbury Code is the unofficial name for the first Code of Best Practice on corporate governance, published in 1992. The other codes were produced by the Greenbury and Hampel Committees, and together they form what is known as the Combined Code on Good Governance.
The codes lay down rules which the London Stock Exchange requires companies to follow, relating to the conduct of directors, directors' remuneration, relations with shareholders, and accountability and audit. They also recommend that boards of U.K. corporations include at least three outside directors and that the positions of chairman and CEO be held by different individuals. The underlying presumption was that these recommendations would lead to improved board oversight.
Essentially, they are designed to make sure that companies are run in an honest and competent way, and to ensure that shareholders are given reliable and adequate information.
In the years since the publication of their reports and recommendations there have been a number of studies published to establish the efficacy of the work of these committees. Most notably in the Journal of management and Governance in 2000, Charlie Weir and David Lang published "The performance-governance relationship: the effects of Cadbury compliance on UK quoted companies" and also in 2000 Jay Dalaya, John J McConnell and Nickolaos G Travlos published "The Cadbury Committee, corporate performance and top management turnover"
While there is no longer the degree of public outrage at the performance at the activities of UK