Industry funds argue board diversity for ASX firms
Amid the continuing debate about superannuation funds governance, industry funds are calling for more diversity on the boards of publicly-listed companies, particularly the inclusion of women, and for those directors to have more skin in the game in terms of personal shareholdings.
The Australian Council of Superannuation Industry (ACSI) — made up of mostly of industry superannuation funds — has made public its latest annual research on the make-up of the boards of companies listed on the Australian Securities Exchange (ASX) and stated: "ACSI and its member superannuation funds believe skilled and diverse boards make for better-governed companies and, consequently, better investment outcomes over the long-term."
The report also argues the benefits of directors holding shares in the companies in which they are involved, stating, "ACSI maintains that well-governed boards require their directors to hold equity in the company" citing the research finding that nearly 11 per cent of ASX100 non-executive directors have no "skin in the game".
"This is a poor result and we hope the number begins to improve," according to ACSI chief executive, Louise Davidson. "While we don't mandate how many shares an individual director should own, we do believe that having skin in the game aligns directors more closely with the investors they represent, and that well-governed boards require their directors to hold equity in the company."
The ACSI research also pointed to a trend for directors to sit on multiple company boards, noting that 105 directors took up one-third of all ASX100 seats.
"This highlights the challenge of expanding the director gene pool. ACSI's review of new appointments shows that half of all directors appointed to ASX100 companies already sit on another ASX100 board," Davidson said.
The report pointed out that while the number of women on the boards of publicly-listed companies had doubled in the past 10 years, women still only represented 23 per cent of directors.
The research also showed that 62 per cent of women on boards were aged 40-60, against just 27 per cent of men, and noted that nearly three-quarters of male non-executive directors were aged 60-70 plus.
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