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BUSINESS LEADERSHIP: THE CATALYST FOR ACCELERATING CHANGE

Follow us on twitter @30pctAustralia OUR OBJECTIVE is to achieve 30% of ASX 200 seats held by women by end 2018. Gender balance on boards does achieve better outcomes. GREATER DIVERSITY ON BOARDS IS VITAL TO THE GOOD GOVERNANCE OF AUSTRALIAN BUSINESSES. FROM THE PERSPECTIVE OF PERFORMANCE AS WELL AS EQUITY THE CASE IS CLEAR. HAS MORE THAN ENOUGH CAPABLE WOMEN TO EXCEED THE 30% TARGET. IF YOUR BOARD IS NOT INVESTING IN THE CAPABILITY THAT DIVERSITY BRINGS, IT’S NOW A MARKED DEPARTURE FROM THE WHAT THE INVESTOR AND BROADER COMMUNITY EXPECT.

Angus Armour faicd, Managing Director & Chief Executive Officer, Australian Institute of Company Directors

BY BRINGING TOGETHER INFLUENTIAL COMPANY CHAIRS, DIRECTORS, INVESTORS, HEAD HUNTERS AND CEOs, WE WANT TO DRIVE A BUSINESS-LED APPROACH TO INCREASING GENDER BALANCE THAT CHANGES THE WAY “COMPANIES APPROACH DIVERSITY ISSUES. Patricia Cross, Australian Chair 30% Club WHO WE ARE

LEADERS LEADING BY EXAMPLE

We are a group of chairs, directors and business leaders taking action to increase gender diversity on Australian boards.

The Australian chapter launched in May 2015 with a goal of achieving 30% women on ASX

200 boards by the end of 2018.

AUSTRALIAN 30% CLUB MEMBERS

Andrew Forrest Fortescue Douglas McTaggart Spark Group Ltd Infrastructure Trust Samuel Weiss Ltd Kenneth MacKenzie BHP Billiton Ltd John Mulcahy Ltd Stephen Johns Brambles Ltd Mark Johnson G8 Education Ltd John Shine CSL Ltd Paul Brasher Ltd Peter Warne Ltd Tracey Horton ao Navitas Ltd Kenneth Henry ac National Australia Rebecca McGrath OZ Minerals Ltd Bank Ltd Catherine Brenner Past Chair of AMP Ltd Neil Chatfield Holdings Ltd and SEEK Ltd Simon Jones Ltd Jeremy Sutcliffe CSR Ltd John Mullen Corporation Ltd Robert Ferguson GPT Group David Kirk Group Ltd Richard Fisher am InvoCare Ltd Ilana Atlas Coca-Cola Amatil Ltd Justin Milne MYOB Group Ltd Wallace Sheppard Property Group Richard Clifford Airways Ltd Brian Schwartz Ltd Michael Chaney Woodside Thomas Pockett Petroleum Ltd and Westfarmers Ltd Corporation Ltd Graeme Liebelt Ltd Zygmunt Switkowski Ltd Geoffrey Tomlinson Growthpoint John Thame Properties Australia Ltd Glenn Barnes Limited Peter Hay Newcrest Ltd and David Gonski ac ANZ Banking RE Ltd Group Ltd Richard Lee am Ltd Robert Johanson Bendigo and Gordon Cairns Ltd Bank Ltd and Woolworths Group Ltd David Clarke Charter Hall Group Philip Clark Shopping Centres Australasia Property Group of Australia John O'Neill The Star Entertainment Ian MacDonald Genworth Mortgage Group Insurance Australia Ltd Lindsay Maxsted Banking Stuart James Greencross Ltd Corporation and Ltd Gregory Martin Ltd Leslie Hosking Adelaide Brighton Ltd Peter Bush Mantra Group Ltd, Pacific Roderic Holliday-Smith Cochlear Ltd Brands Litd & Southern Cross Media and ASX Ltd Group Ltd Graham Bradley GrainCorp Ltd Christopher Roberts Orora Ltd Paula Dwyer Ltd Geoffrey Brunsdon Sims and Ltd Management Ltd John Cowin Domino's Pizza David Crawford ao Ltd and Enterprises Ltd Lend Lease Ralph Norris Ltd Raphael Geminder Pact Group Douglas Halley Past Chair of Duet Holdings (Australia) Pty Ltd Harvey Collins Past Chair of Derek La Ferla Sandfire Resources NL Navitas Ltd Trevor Gerber Airport Ltd David Haslingden Past Chair of Nine Allan McCallum Group Ltd Entertainment Co. Holdings Ltd Robert Ferguson Primary Health Donald Taylor Past Chair of Care Ltd GrainCorp Ltd Glenn Davis Ltd Roger Sexton Past Chair of IOOF John Prescott ac Past Chair of Holdings Ltd Holdings Ltd Peter Scott Past Chair Perpetual Ltd Craig Farrow Past Chair of M2 Jerry Maycockm AGL Energy Limited Group Ltd and Ltd Neil Hamilton Past Chair of OZ Kate Spargo UGL Group Minerals Ltd David Blight Chair of the ao Past Chair of Veda Remuneration and Nomination Group Ltd Committee Japara Healthcare Ltd David Turner Past Chair of Jim McKerlie Drillsearch Energy Ltd Commonwealth Bank of Australia Robert Wright Ltd Kevin McCann am Past Chair of Macquarie Group Ltd Robert Mactier STW Communications Jac Nasser ao Past Chair of BHP Bruce Brook Programmed Billiton Ltd Maintenance Services Ltd Simon McKeon ao Past Chair of Peter Robinson Australian AMP Ltd Pharmaceuticals Industries (api) Ltd Diane Smith-Gander Past Chair of Louis Carroll Cover-More Group Ltd Broadspectrum Ltd David Gordon Accent Group Ltd and Margaret Jackson ac Past Chair of Past Chair of Ten Network Holdings Ltd Spotless Group Holdings Ltd Greig Gailey Caltex Australia Ltd Graham Kraehe ao Past Chair of Bluescope Steel Ltd Mike Hutchinson Infigen Energy Ltd Graeme Hunt AGL Bob Every ao Past Chair of Ltd & Ltd George Venardos IOOF OUR APPROACH

THE BUSINESS CASE FOR DIVERSITY ON BOARDS IS CLEAR

The business case is clear – a higher standard of corporate governance, improved financial performance and an enhanced capacity to attract and retain female talent.

Diverse teams make better decisions: McKinsey & Company research of 180 publically traded companies found ROEs were 53% higher for companies ranking in the top quartile of executive board diversity than those in the bottom quartile. In Australia, the Reiby Institute found ASX 500 companies with women on their boards deliver a significantly higher ROE than those with no women on their board.

One woman is not enough: 30% is the proportion when the contributions of a member of a minority group are valued in their own right. Research has shown that a critical mass of three or more women can cause a fundamental change in the boardroom and enhance corporate governance. GETTING TO 30%

AN ACHIEVABLE GOAL

Achieving 30% female directors on ASX 200 boards is within sight. Women currently comprise 26.7% of ASX 200 board seats. In order to achieve the target by the end of 2018, we need a monthly year-to-date new appointment rate of over 50%.

Meeting this target will require demand by investors, leadership from board chairs, commitment by nominations committees and action from head hunters. It will also require an ongoing investment from CEOs and leadership teams in developing the pipeline of female directors.

Percentage of female directorships on ASX 200 boards

30% 26.2% 26.2% 26.7% 25.3% 25% 21.7% 20%

15%

10%

5%

0%

2015 2016 2017 Jan - 18 Feb - 18 INVESTOR GROUP INVESTOR TOOLKIT Statement of Intent FOR ENGAGING

DISCLOSURE EXPECTATIONS BOARDS ON DIVERSITY

As part of our overall stewardship responsibilities on behalf of our members and clients, we will actively engage with investee companies on corporate As asset owners and asset governance issues including the process the board uses to identify suitable managers we are responsible candidates for the board. for the stewardship of the investments we make on To provide investors with a comprehensive understanding of an investee behalf of our members company’s diversity policies, we expect companies to be transparent and clients. Part of that regarding the procedures used to find new members for the board and how The 30% Club believes that responsibility includes the that process ensures a diverse board. gender balance on boards not assessment of the boards only promotes better leadership THE BOARD’S ROLE IN DIVERSITY of our investee companies. As well as disclosures required under Corporate Governance Codes, we also expect to see evidence of a culture of commitment to diversity at and governance, but further We believe boards that Companies that value diversity of thought, and the the board level. Further details of the types of enquiries we will make and contributes to better all-round genuinely embrace cognitive associated benefits of an engaged, thriving, innovative disclosures we will seek are outlined in our Investor toolkit for engaging board performance, and ultimately diversity, as manifested and productive workforce, are committed to fostering boards on diversity. through appropriate gender increased corporate performance. an environment that enables that diversity to permeate representation and a broad ENGAGEMENT and define the culture. This commitment begins at the spectrum of skills and board level – setting the tone from the top – and extends experience, are more likely to PURPOSE throughout all levels of the organisation. We will actively engage with board chairs and nomination committees on the A board that embraces its role in governing diversity achieve better outcomes for issue of board diversity to convey the high level of importance that we, and This toolkit has been developed by the 30% Club and culture throughout the company is more likely to investors. There is increasing our clients and members, place on this issue. to help investors, and those representing them, research to support this accelerate progress and reap the benefits a diverse more effectively engage with boards of directors workplace can bring. hypothesis. We will raise questions where there is evidence that there has been a on this important issue. We believe diversity is first driven by a well-considered failure in the nomination process with respect to board diversity. and disclosed strategy that articulates why this issue As investors, we support the matters to a company and how it is implemented by vision of the 30% Club which We may choose to vote against the re-election of the chair of the board management and monitored by the board. is “to achieve a minimum of or nomination committee, particularly where there continues to be no 30% women on boards.” evidence of board diversity, and engagement with the board has not led to any satisfactory outcome.

SHAPING THE BOARDS BARRIERS TO OF THE FUTURE PROGRESSION Succession planning, board evaluations and term limits The reasons Chairs and Non-Executive Directors (NEDs) use as to why they can’t or won’t appoint female directors to their boards. “WE HAVE

JUST COMPLETED One of the reasons given by Chairs and NEDs for not appointing non-executive directors explained, A SEARCH women to their boards is “We during face-to-face or telephone have just completed a search and AND HAVE interviews, the practices of their NO have no vacancies for a while boards in relation to succession, VACANCIES This approach assumes that each1”. FOR evaluation and renewal; emphasising A WHILE” director has an unassailably fixed ot all of the reasons reflect a belief that women 1 the iterative and evolving nature of term, regardless of the needs of these practices in recent years. The This booklet has been compiled Nshouldn’t be board directors or can’t contribute the company into the future or the ten chairs and NEDs were chosen from conversations that our 30% effectively. Yet in stating them, they demonstrate a lack of value being added specifically by due to their significant experience understanding of the evidence of the business benefits of that director. Forming the best Club: Education Working Group on boards and observation of board to optimise a company’s board gender diversity and a bias in preferring the status quo evolving board processes and members and other female non- future success may require changes and gendered perceptions around the skills, attributes and practices. executive directors associated in its composition from time to experience required to be an effective non-executive director. Advice was also provided by time to meet future strategic needs, with the 30% Club have had with The reasons provided have been held up against leading an experienced board evaluation continuously upgrade director listed company chairs and non- research. Overall, the conclusion was that most of these consultant, who specialises in performance and to enhance evaluating ASX 200 Boards. The executive directors as to why they reasons were not consistent with findings from national and diversity, including gender diversity. Australian Institute of Company can’t/ won’t/shouldn’t be forced international research which demonstrate the benefits of This report provides insights into Directors’ (AICD’s) ASX 200 women on boards and board diversity in general. the practices and conversations to appoint female directors to director members were also invited By reiterating the business case for gender diversity and within ASX 200 boards when their boards. These were common to participate in an online survey, engaged in succession planning, openly discussing inherent biases, misunderstandings and supplementing the qualitative reasons, heard at different times board evaluation and renewal misperceptions that female directors frequently still face, interviews. This enabled quantitative by all of the contributors. processes. Ten ASX 200 chairs and we hope that we can influence current and future NEDS and data to be presented alongside chairs to positively embrace and understand the benefits of 1 Barriers to Progression, p.11, published by the 30% Club qualitative insights. board gender diversity. HOW IT WORKS

SHARING RESOURCES AND COLLABORATING

The 30% Club complements and amplifies individual company efforts and existing groups through measurable goals and broad collaboration.

There is no financial commitment; the 30% Club is supported by a Steering Committee and Working Groups that are made up of senior directors and executives who volunteer their time and skills to help direct efforts.

The Working Groups are focused on influencing and working with investors, executive search consultants, professional services firms, chairs and directors to achieve change. FOCUSING OUR EFFORTS

THE POWER OF COHESION

Chair Leadership “There is a tendency for boards to pick up people they feel comfortable having around the table. What we really need for high-performing boards is to seek discomfort and to drive challenging discussions.” David Gonski, Chair Australia and Banking Group Limited and Former Coca Cola Amatil Limited

Shareholder and corporate governance “Diversity is a subject very close to our hearts at Aberdeen, both as an employer and as an investor. We know that the best companies draw on the widest pool of talent. So it is important for us that the businesses in which we invest don’t limit themselves, in either the way they recruit, or how they develop their people. This applies to our own business too.”

Brett Jollie, Managing Director, Australia Aberdeen Asset Management Limited

Executive search community “The Executive Search Industry, through its Code of Practice is very committed to ensuring that the 30% target becomes a reality. We all enjoy seeing competent women taking their seat around the Board table.”

Katie Lahey, Executive Chairman Australasia, Korn Ferry Fostering the Pipeline “When you are in a position of influence you need to make sure you have a genuine commitment to diversity. Age, gender, education, external background and experience. Board composition is a light for the diversity in executive ranks and throughout organisations. Diverse groups will always find better outcomes and results in superior performance every time” Margaret Jackson, Former Chair, Spotless Group Holdings

Advocacy and Education “Diversity brings with it cognitive diversity, different perspectives and information processing. In an environment where companies are facing exponential changes in technology, demographics, economies and sustainability, bringing different thinking to the table is both a commercial and social imperative and this has been recognised by many of the worlds leading institutional investors.” Melanie Willis 30% Club Australia Education Working Group Chair, NSW/ACT Chapter Chair and Board member of Chief Executive Women, NED of Challenger Limited, Southern Cross Media Group and Mantra Group.

Chair Leadership Advocacy and Education Shareholder and Corporate Governance

Fostering the Pipelines Executive Search Community OUR GLOBAL CHAPTERS

A FOUNDATION TO BUILD ON

With chapters in ten countries, the 30% Club is approaching this issue on a global scale. Each chapter believes in diversity as a driver of business growth.

Australia

United Kingdom

United States

Canada

South Africa

Hong Kong

Ireland

Italy

Malaysia

GCC WHAT YOU CAN DO

SUPPORTING THE 30% CLUB

We encourage individuals and organisations to support our work and help us in our quest to increase the number of women on company boards.

• Become a Chair Member • Call upon your own organisation to introduce targets for women in leadership • Share information on the 30% Club with your colleagues and networks • Encourage lagging companies to improve their diversity efforts • Host events for the 30% Club • Lend your expertise to the 30% Club Working Groups • Join in the conversation by tweeting @30pctAustralia or using the hashtag #30pcglobal CONTACT US

Please email both Naomi Menahem and Melissa Powell at the AICD to become a Chair Member of the 30% Club:

Naomi Menahem: [email protected] Melissa Powell: [email protected]

To support the 30% Club or to discuss the working groups, please contact Naomi Menahem.