‘Overboarding’ highlighted as problem on ASX 300
There is a problem surrounding ‘overboarding’ on ASX-listed companies with almost half of ASX 300 companies having at least one director who sits on four or more boards.
Research by Melior Investment Management found 146 companies on the ASX 300 had at least one director who sat on four or more boards. Unlike other countries, Australia did not have strict limits on how many board positions a director could hold and it also presented problems around turnover as director may sit for several years rather than stepping down to take up a new position.
A study by Harvard University found companies with overboarded directors had inferior economic performance than those without.
This became problematic when directors needed to handle the “onerous” responsibilities of the role.
Earlier this month, it was announced Iress had appointed Roger Sharp as its new chair, replacing Tony D’Aliosio. As well as the role at Iress, he was also non-executive chair of travel firm Webjet, non-executive chair of Geo, deputy chair of Tourism of New Zealand and chair of the Lotteries Commission of New Zealand.
Melior said 16% of the proposals it had voted against in 2020 related to overboarding of directors.
Tim King, chief investment officer at Melior, said: “Not only are the regulatory requirements imposed on directors becoming more onerous, they are having to deal with a broader range of issues such as ESG as well as engage with different stakeholders.
“COVID-19 is a perfect example where boards had to very quickly bring a new focus to issues such as human capital, risk management, company culture and business continuity.
“The concern is whether a director is too stretched across too many publicly-listed companies can meet all of those obligations effectively.”
AUTHOR
Laura Dew
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
