Berkeley tanks under good governance scrutiny

An analysis of corporate governance at FTSE 100 companies finds that house-builder Berkeley Group is the second worst of the lot.

Above: Tony Pidgley – clearly gutted

It seems that the study authors are not keen on chairman Tony Pidgley’s £21m remuneration package, or on chief executive Rob Perrins trousering £11m. Berkeley shareholders don’t seem to mind too much, however, as the twosome continues to bring home the bacon.

In fact none of construction’s FTSE 100 companies came out particularly well in the corporate governance study, with only Barratt Developments making the top 50.

The Institute of Directors 2016 Good Governance Report looked at 34 factors across five areas of corporate governance: board effectiveness, audit & risk/external accountability, remuneration & reward, shareholder relations and stakeholder relations. The choice of these criteria was determined by the UK Corporate Governance Code and the Companies Act 2016.

The Good Governance ranking is headed by the following organisations:

British America Tobacco
Unilever
Diageo
Sage Group
Next
Kingfisher
DS Smith
United Utilities Group
Royal Mail
Admiral Group

You have to look down the list a way to find anyone from the construction sector:

42. Barratt Developments
53. Wolseley
57. Persimmon
58. Ashtead
70. Taylor Wimpey
94. Travis Perkins
99. Berkeley Group

Ironically, while big tobacco comes top, Britain’s favourite grocer, Tesco, is bottom of the pile and the only company below Berkeley. That was due to the legacy of an accounting scandal that damaged its scores for auditing and accounting.

The study was supported by the Chartered Quality Institute and Cass Business School.

Estelle Clerk, head of profession at the Chartered Quality Institute, said: “Good governance requires more than a stated intent. It requires a profound understanding of how principles of good governance are implemented and delivered at every level of a company and its delivery partners. For the construction sector, working with a diverse supply chain in order to deliver key projects, this is especially challenging. Our intention in supporting the Good Governance Report is to stimulate discussion on what constitutes good governance and how this can be demonstrated.”