The Wates Corporate Governance Principles for Large Private Companies: Review of reporting against the Wates Principles

This report is an outcome of research commissioned by the FRC to provide an over-time comparison with, and to build upon, our previous assessment of corporate governance statements by large private companies. The previous assessment looked at companies’ 2019/20 statements; this update is based on 2021/22 statements and adds a ‘user perspective’ surveying what information users value most and for what purposes, and how such information is delivered. As with the previous assessment, the aim is to consider how companies respond to the requirement to produce a corporate governance statement and how the quality of those statements can be improved.  This years’ research found that of the 1,815 companies in scope of the Regulations, 547 companies chose to adopt the Wates Principles. Of those that followed the Wates Principles, we found slight improvements in most of the disclosure scores for each Principle. For example, more companies reported on how their purpose aligned with their business practices and on the connection between their strategy and purpose/culture. Other specific disclosures included more information about the Chair, how the board understands the company’s business needs and stakeholder interests, and rationale for its remuneration structure.
While improvements were made in some areas, our findings highlight the need for companies to reduce their use of boilerplate disclosures and foster a disclosure approach which explicitly links a company’s purpose, strategy, culture, and values to its board’s activities and the context in which it
operates. Going forward it is recommended the companies provide context-relevant and time- specific disclosures.