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Bellwether Winter 2017: The views of the FTSE

31 January 2018

Bellwether Winter 2017: The views of the FTSE - Read more

Business confidence remains low, but there are some early signs of improvement in the most recent FT–ICSA Boardroom Bellwether survey of the FTSE 350

The business environment

Economic confidence continues to steadily increase, with 27% of survey respondents anticipating an improvement in global economic conditions and 36% predicting ‘no change’. The UK, pessimistic over recent surveys, saw a slight rise in economic confidence, with 8% expecting improvement, up from 5% in summer 2017, and those anticipating ‘no change’ up to 28% from 19%.

Capital investment is always a good proxy for business confidence, and 41% of respondents predicted an increase.


The EU referendum is still cause for concern, with just over half the respondents stating that Brexit will cause some or significant damage to their business and none believing it will be positive.

Despite this, and press reports, only one respondent’s company is considering moving its head office or a substantial part of its business from the UK to somewhere else in the EU. 43% of respondents indicated that Brexit is included amongst the principal risks being reported as facing the company.


Progress towards diverse and representative boards remains slow, despite high-profile initiatives such as the Davies, Hampton-Alexander and Parker reviews.

However, 71% of respondents rate their board as diverse for gender, the highest figure since we started tracking it in 2012. Just 7% of respondents now regard their board as not gender diverse.

This survey also measures boardroom diversity for geographical spread and business experience, as well as education and ethnicity. Such measures have changed little over the past two years.

Ethnicity is still considered to be the least representative area, with only 31% of respondents considering their board to be diverse and 53% believing it is not.

Board appointments

Recently we looked at how companies manage their pipeline to develop a wide, diverse pool of ‘board-ready’ executives. Only 43% of survey respondents believed their pipeline is sufficient, a drop from 53% in summer 2017.

The changes to the UK Corporate Governance Code, on which the Financial Reporting Council is consulting, place more responsibility in this area on the nomination committee.

Managing risk

Respondents to the summer 2017 survey said cyber risk was rising more than any other risk facing the FTSE 350.

This is still true in this survey, although 56% of respondents also perceived both legal and political risk to be rising. 80% thought exposure to cyber risk is increasing, of which 90% told us their board is increasing spending on mitigating it.

Following from the release of the Paradise Papers, 97% of respondents told us their board has discussed reputational or other risks around tax practices. 57% have discussed this within the past three months.

Regarding current policies and guidelines on sexual harassment in the workplace, 52% said their board is satisfied or very satisfied with them. Only 3% indicated their board was not satisfied.

Regulation and compliance

Most companies claimed to be ready for the introduction of the EU’s General Data Protection Regulation (GDPR) in May. 89% of respondents believe their company will be ready to comply, slightly down from 93% in summer 2017. Those involved should see recently-published ICSA guidance on the subject.

Reporting on the gender pay gap appears easier than some anticipated. Of those respondents who have reported, 44% indicated that it was not difficult, although a third said it was.

This reporting does not seem to have identified any significant concerns – only 15% of respondents reported an increase in the company’s perception of legal risks, and only 9% reported that preparing for reporting had resulted in changes to pay policies or strategies. However, 33% of respondents did not know.

Only 12% of respondents thought that the UK government should take action to make it more difficult for a foreign company to take over a UK company, although 52% thought that this may be necessary, depending on the circumstances. 32% felt that no action should be taken.

Executive pay

Discussing the government’s green paper on corporate governance, ICSA said: ‘There is a mistaken perception that remuneration committees do not take into account wider stakeholder interests and do not exercise challenge.

This is not the experience of our members, who regularly attend remuneration committee meetings.’ In this survey we looked at how the FTSE 350 remuneration committees take into account some of the suggested criteria in the green paper.

68% of respondents told us that their remuneration committee has made changes to a remuneration policy following feedback from investors, with a further 28% indicating that no changes had been made as none were requested.

93% of respondents confirmed that remuneration committees consider pay structures and incentives across the wider workforce, and two-thirds considered the pay ratio between the CEO and average employee.

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