The publication of the Walker Review will prompt changes in corporate governance, and ought to promote a much higher profile to human capital management in the banks.
Sir David Walker, who was asked to review bank governance by Alistair Darling, the Chancellor, is proposing measures that will oblige non-executive directors to demonstrate a thorough understanding of their companies along with the introduction of remuneration committees to examine pay policies on a organisation-wide basis.
This will be supported by a Code of Guidance on remuneration issued by the Financial Services Authority. A draft Code was published in February and the final version is expected end July, with an implementation date of November.
The Walker Review is expected to make recommendations in the following areas:

• Risk management at board level, including the incentives in remuneration policy to manage risk effectively,

• Improving the balance of skills, experience and independence required on the boards of UK banking institutions,

• Board practices and the performance of audit, risk, remuneration and nomination committees,

• The role of institutional shareholders in engaging effectively with companies and monitoring of boards.

Although strong on aspects of practice, the Review is light on ideology. There is unlikely to be a thorough-going analysis of factors such as agency theory – a simplistic notion of incentives that has fuelled remuneration policies – or the extreme short-termism brought about by quarterly reporting.