Governance as burden, shareholder rights, ending the five-year audit reform debacle, glaring failures at the Post Office, the higher CEO pay campaign and saving the planet: all of these were features of the year in governance that was 2024.

It has been an exhausting, sometimes exasperating, often confusing but ever-fascinating year chronicled and detailed by Board Agenda.

Out of all that, can we spot any trends? We could, perhaps, point to the change in direction of opinion on governance. Many people of influence have said it’s all gone a bit far and some of it should be reined in.

Oddly, in the UK’s case, it’s not so simple. Governance has failed to be resolved (audit reform) or failed entirely to do what it should (the Post Office).

The duality—too much, but not enough—is, to get painfully philosophical about it, an ever-present feature of the human condition. But it is there in governance, too.

It’s too much to go over every development that happened this year but here’s a top five that, more than any others, gave 2024 its character.

1. Ungovernance

We look back on 2024 as the year in which ungovernance culminated. It began mostly last year when it became clear that Julia Hoggett, chair of the Capital Markets Industry Taskforce and chief executive of the London Stock Exchange, pushed hard for higher CEO pay and a “reset” of corporate governance.

In short, her message was that if the UK economy was to be underpinned, and the LSE saved from what looks like a traumatic decline, we need to acknowledge there is not enough pay (see CEO pay below) and too much governance.

There have been victories on the pay front, of sorts, and on governance. Last year, the then Tory government was persuaded by Hoggett and the CMIT to end about-to-be-introduced resilience reporting and publication of audit and assurance policies.

In many ways, the trend has continued into this year. The new UK Corporate Governance Code, in its first refresh since 2018, may have introduced internal controls statements but also ditched ideas for audit committee narrative reporting disclosures and reports on shareholder engagement.

The thinning out of governance continued elsewhere. Shortly after the new Labour government was elected in early July, the Financial Conduct Authority announced it would push ahead with hotly-contested reforms that would see the weakening of rules for dual-class shares and abandoned shareholder votes on significant transactions. Many shareholders remain unhappy about that. Indeed, though there has been much talk of easing tensions between boards and shareholders, particularly over corporate reporting obligations, the move seemed to open fresh wounds.

2. The process of audit

One place where there seemed too little governance for many was in the process of audit. Governments have promised a substantial audit reform bill since 2020 following the collapse of outsourcing giant Carillion in 2018.

But the bill has failed to materialise. The change in government this year saw audit reform stamped firmly back on the agenda when in July it was included in the King’s Speech, the UK government’s legislative plan.

There was precious little detail offered at the time. But the government does appear to be willing to talk about it… a little.

An autumn debate in the House of Lords saw government minister Lord Leong say the government intended to push ahead with creating a new regulator, the Audit, Reporting and Governance Authority (ARGA), with hefty new powers. These would include being able to sanction company directors for deficient corporate reporting. There might also be sanctions for audit committee members if audits fail.

There was some suggestion too that government is still considering a reform to audit structure—the ever-vague managed shared audits—though Lord Leong added: “There are complex issues involved and we expect extensive engagement on these issues.”

Since then, there has been no further word.

3. The Post Office

As we all know, the Post Office had an IT system, Horizon, that failed, causing hundreds of sub-postmasters to be wrongly prosecuted, and some even jailed, for fraud and theft. Perhaps the most significant corporate scandal in UK history.

However, the scandal also has to be seen as a huge failure of governance, highlighted by the Institute of Directors when it issued its own report on the inquiry that has run throughout the year.

The IoD said the Post Office board had been “excessively passive” and “absorbed in a culture of mistrust”. The institute called for the “professionalisation” of boards at state-owned businesses and for reform of the UK’s corporate governance code to ensure someone with proper IT skills sits on the board.

Roger Barker, director of policy and governance at the IoD, said: “The roots of the scandal are hence not to be found in the lines of code in the Horizon software, but in the performance of the board, management and ownership function of the Post Office, who should have delivered better supervision and oversight.”

He added: “What is needed are better directors with appropriate knowledge, skills and attitudes to fulfilling their crucial societal roles.”

4. CEO pay boost

This was the year in which campaigners managed to successfully talked up the need for a big expansion of CEO pay.

After Covid and the cost of living crisis, City figures decided they’d had enough of millions of £s in single digits and needed more. The campaign may have started last year but 2024 was the year in which many CEOs banked more cash.

As mentioned above, the campaign began with Julia Hoggett in 2023, but in February this year her boss, David Schwimmer, chief executive of the LSE Group, saw his pay almost doubled to £11m.

Three months later, in a speech, Hoggett was hailing remuneration chairs for being willing to sit on “the naughty step” and accept shareholder revolts over pay.

Other big pay rises followed. The High Pay Centre produced figures showing that average CEO pay was on the way up. Other research revealed investor approval of management AGM resolutions was “record breaking”, while advisers Georgeson, produced figures showing shareholder revolts specifically aimed at executive pay had declined to single figures for the first time. CEOs will look back fondly on 2024 their Christmas stockings have been filled to bursting.

5. ESG

Well, what to say about ESG? Climate change literally remains the biggest issue on the planet. In October, the United Nations’ executive director, Inger Andersen, said: “Climate crunch time is here.” In November, the UN said scientists had concluded we have reached 1.5 degrees of warming over pre-industrial levels (the critical threshold for the Paris Agreement on climate change).

And yet, mandatory climate risk reporting rules for US companies look set to wither away under a second Trump presidency and there is talk in Brussels of softening new reporting rules—the Corporate Sustainability Reporting Directive (CSRD)—following a report from former European Central Bank president Mario Draghi that concluded the legislation, along with other laws, forms a “major source of regulatory burden”.

There is talk that an “omnibus” bill formed of three separate pieces of law could be an opportunity to pare back CSRD significantly. And yet, there signs climate remains an agenda setter. This month saw UK officials give the green light for IFRS S1 and S2, two new pieces of ESG reporting. Ministers still have to make a decision.

Where are we on the role of corporate governance in saving the planet? For the pessimistic, it may seem as if ESG reporting rules are in retreat at precisely the time they are needed most. The optimist will hold on to the idea that CSRD will not be abolished, IFRS S1 and S2 will likely come into effect in the UK and many other countries, and Trump will only be in office for four year. Nevertheless, corporate governance seems like it will ride the climate knife edge.

Things to brace for in 2025

Donald Trump

We haven’t said much about the new US president. He doesn’t like ESG, climate reporting or the role of proxy advisers; he harbours a superannuated attachment to fossil fuel industries. His trade policies could have major implications for geopolitics and economics around the world and on they’re not good. We are in for a period of major disruption as his threat-lead transactional approach to everything from the Panama Canal to federal budgets takes hold in Washington once again. Brace for noise, chaos and uncertainty, but as a trusted avisor recently said: “Don’t panic!”

Audit reform

If you’re a non-executive, especially an audit committee member, this is one to watch. If a new watchdog receives beefed-up powers it could mean sanctions for auditco members if audits go wrong. What those will be remains unclear but it will certainly come with publicity. And that’s always painful.

Also, keep an eye on measures to restructure audit in a way that it is shared between more than one auditor. This could transform audit in the UK out of all recognition, but it will be hard to achieve and so might not happen. It’s not a given that Labour seeks to foist more regulation on corporates.

London Stock Exchange

Will it turn things around in 2025? Recent years have been dominated by talk of the falling number of companies listed on the LSE. Many have delisted to embrace US liquidity, while potential new listees have bypassed London entirely.

Others, such as Canal+, have not.

Expect more rallying cries for the LSE and continuing pleas for lighter touch governance and regulation.

Football governance

The House of Lords has been conducting a fascinating debate on legislation to create a new regulator for the game, much of which reflects the broader debate on key issues that include diversity and inclusion and disclosures (see our snippets here and here ). The outcome will not be known until the final whistle blows.

Elon Musk’s $56bn

We talked about CEO pay above but it is nothing compared to the $56bn Tesla awarded its CEO, Elon Musk. However, a Delaware court has ruled twice this year that the award cannot be made because the board has failed to show it is “fair” and that its proxy statement about the pay deal contained “material misstatements”.

Will Musk continue pursuing history’s biggest ever pay cheque? Will he have time while trying to make the US Federal government more efficient? We will have to wait and see. But he doesn’t seem one for giving up easily.