It said that while separation was preferable, there might be circumstances whereby a combination was workable.A “lead” non-executive director should be appointed and named in the annual report to ensure that no abuse of power took place.Some shareholder groups were disappointed that the report included no requirement for institutional investors to publish their voting policies. Hopes for a shareholder vote on executive remuneration were also dashed with Sir Ronnie saying such matters could be discussed in the normal round of meetings between companies and institutional investors.The main changes were that non-executive directors should form at least a third of the board and that companies should use their annual meetings more effectively by including a presentation to shareholders.The report fudged the issue of whether the chairman and chief executive roles should be split. Unveiling what he admitted was a low-key report, Sir Ronnie Hampel, chairman of ICI, said the committee’s findings were designed to build on the earlier Cadbury and Greenbury reports on corporate governance and executive pay and were not intended to constitute a revolution.
In a plea for the use of common sense and judgement over rigid codes and rulebooks he said the corporate governance debate had moved too far in favour of accountability and too far away from business prosperity “We wish to see the balance corrected,” he said. Governance codes should not be treated as prescriptive codes which encouraged a “box-ticking” approach.Dismissing accusations of complacency, he added: “I don’t see anything macho in producing a revolution. We think the total document sets the proper framework for governance.” He admitted that he had questioned whether the committee had been necessary in the first place and said he hoped there would not be another “in the foreseeable future.”The report was roundly criticised by Pirc, a leading corporate governance consultancy, which said it was a “sideways shuffle” and a “missed opportunity which failed to take the debate forward”.Anne Simpson, Pirc’s joint managing director, said: “If Ronnie Hampel set out not to make history, he has succeeded. In a rising stock market it is easy to forget the importance of rigour And to advise common sense is to state the obvious. While the report has some positive elements it does not take the debate any further forward than Cadbury five years ago.”As expected, the Hampel committee rejected calls for continental-style two-tier boards saying the unitary board had overwhelming support.

The Hampel report on corporate governance received a mixed reception yesterday as business organisations welcomed its flexible approach while shareholder organisations criticised its failure to tighten up the way companies were run. A cover up of that derivatives loss has since cost the jobs of six senior executives, including the chief executive, Martin Owen.NatWest Markets suffered from a sharp rise in its cost base following the recent acquisitions of businesses costing more than pounds 1bn. The purchases of Gleacher, Greenwich Capital and Hambro Magan contributed to a pounds 30m rise in the division’s operating income but led to a 51 per cent jump in costs from pounds 398m to pounds 600m.NatWest Markets made a return on the capital employed in the business of only 2.4 per cent during the half year, which Mr Wanless admitted was “inadequate”. “I’m confident now, with the new management in place, that they’ll get the return up.”It was announced last week that Konrad “Chip” Kruger, an internal candidate, would lead NatWest Markets as chief executive. Mr Wanless refuted the accusation that Mr Kruger’s appointment followed a failure to attract a heavyweight outsider to the position.Questioned on possible acquisitions, Mr Wanless said it made strategic sense for NatWest to expand its interests in long-term savings and pensions by buying an insurance company. But he said current valuations made a deal unlikely.Comment, page 17.

That return compared with more than 25 per cent from the core high street bank and dragged the group total down to 13.4 per cent, below NatWest’s own 17.5 per cent target.Even that increase would leave NatWest well behind its best performing rivals such as Lloyds TSB, which last week unveiled a sharp rise in its return on equity to over 40 per cent.Mr Wanless insisted last week’s reorganisation, which sees NatWest Markets predictable and highly profitable treasury operation taken back into the group, was not just a cosmetic exercise. The group’s shares fell sharply on disappointing first-half profits and the perception that recent talks which might have led to a takeover of the group had been abandoned. Lord Alexander, chairman, dismissed recent speculation about the future of NatWest as “overblown and fevered” and gave Derek Wanless, the group’s chief executive, a forceful vote of confidence. That represented a fall in profits even after the pounds 85m hit attributed to an interest rate option pricing error early in the half.