Gender Diversity Progress Report GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 Companydirectors.Com.Au 2

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SEPTEMBER - NOVEMBER 2015 QUARTERLY REPORT | VOLUME 2

30% by 2018: Gender diversity progress report GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 2

The road to 2018

As 2015 draws to a close, it is important to reflect In addition to our advocacy work with the chairs of our ASX 200 companies, we will be launching several new on the current statistics and the progress we have programs, research initiatives and strategic partnerships in made since the beginning of the year. 2016. These initiatives will build on the strength and success of our current programs, including our Chair’s Mentoring At 31 January there were 19.4 per cent female directors Program and Board Diversity Scholarship Program. on ASX 200 boards and a 27 per cent appointment rate. In partnership with the Federal Government’s Office for Thirty-five ASX 200 companies had no female directors, Women, we have awarded 195 scholarships to current with four in the top 100 companies and one in the top 50. and emerging female directors living in rural and remote Currently, there are 21.5 per cent female directors on ASX areas, working in growth sectors and to culturally and 200 boards and 24.8 per cent on the ASX 100. Although linguistically diverse individuals. We have offered 335 this data is from the end of November and we still have one scholarships to women since our first partnership with the month to go before we will know the full year’s picture, this is Federal Government in 2010. a change of two percentage points and an encouraging sign. We launched our fourth Chair’s Mentoring Program, pairing However, the ASX 200 needs to do better and 28 boards highly experienced and qualified emerging female directors still have no female directors. We have stepped up our with chairs and experienced ASX 200 directors. We have efforts over the last few months to ensure Australian witnessed 255 Mentees participate in this program since companies devote their energies to increasing the number of 2010 and been delighted by their appointments to boards women on their boards. across a variety of sectors and industries.

In April we called for all boards to ensure that 30 per cent of We will work collaboratively with organisations, directors their directors are female, urging our ASX 200 companies to and boards in 2016 to achieve our goal of at least 30 per meet this new target by the end of 2018. We also supported cent female directors on ASX 200 boards by 2018 and look the launch of the Australian chapter of the 30% Club in May. forward to communicating our plans to our members and the wider director community. For the ASX 200 to reach this target the appointment rate must continue to rise and we need to reach an annual appointment rate of at least 40 per cent female directors to achieve the 30 per cent target by 2018. We are deeply concerned that they won’t get there.

The new Chair of the AICD, Elizabeth Proust AO FAICD, has publicly announced that if ASX 200 companies do not achieve this target by 2018 then we will consider supporting regulatory quotas to increase the number of women on boards. Whilst we have consistently opposed quotas, we can no longer accept the low representation of women on John Brogden am faicd our listed boards. If companies are unwilling to change Managing Director & Chief Executive Officer, themselves then the regulatory imposition is a real option. Australian Institute of Company Directors GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 3

Progress report

There have been a number of ASX 200 Companies with 30% female directors (as at 30 November) changes within the ASX 200 during the period September AMP Limited Pacific Brands Limited to November. Asaleo Care Limited QANTAS Airways Limited

Bank of Queensland Limited Recall Holdings Limited Some have been temporary adjustments, such as Caltex falling Boral Limited Retail Food Group Limited under the 30 per cent threshold Brambles Limited SEEK Limited from September to October, only to return again in November with BT Investment Management Sims Metal Management Limited the appointment of another female Limited Slater & Gordon Ltd director Penny Winn. Wesfarmers Caltex Australia Limited also returned to the list on the Spark Infrastructure Trust retirement of Dr Bob Every AO Coca-Cola Amatil Limited Stockland Corporation Ltd at the November board meeting. CSR Limited Additionally, Cardno joined the list Suncorp Group Limited in September as two male directors Dexus Property Group Super Retail Group Limited retired from the board, only to move Duet Group off the list again in November due to Telstra Corporation Limited the retirement of Elizabeth Fessenden Fortescue Metals Group Ltd Trade Me Group Ltd and the appointment of new male Henderson Group PLC directors. Veda Group Limited IOOF Holdings Ltd The current number of companies Wesfarmers Limited with at least 30 per cent female Japara Healthcare Limited Woolworths Ltd directors is now at 38 (November 30, JB Hi-Fi Limited 2015). There have been several new companies added to the list. Macquarie Group Limited

Medibank Private Limited

MetCash Limited

Mirvac Limited

Navitas Limited

Orora Limited GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 4

New Additions • G8 Education Limited left the list on the retirement of Jennifer Hutson on October 15. • Japara Healthcare Limited appointed Joanne Stephenson to the board on September 1. Tim Poole also retired on • Origin Energy Limited left the list on the retirement of Karen this date. Moses on October 21.

• AMP Limited appointed Holly Kramer to the board on • Sydney Airport Limited left the list on the retirement of October 14. Max Moore-Wilton on August 26. Max retired from the board on May 14 but the 3Z report wasn’t lodged with • Henderson Group PLC was appointed to the board on the ASX until August. Another male director Grant Fenn October 5. Due to a reporting error the number of male was appointed to the board on October 1 removing the directors sitting on the board was adjusted. company from the list. • IOOF Holdings Ltd appointed Elizabeth Flynn to the board • Perpetual Limited left the list on the retirement of on September 15 and Ian Griffiths retired from the board Elizabeth Proust on November 5. on October 2.

• JB Hi-Fi Limited appointed Wai Tang to the board on No Female Directors September 14 and James King retired from the board on There are currently 28 companies on the ASX 200 without October 29. any female directors. This has reduced by two since August, • MetCash Limited appointed Helen Cash to the board on although some companies joined the list. Tassal Group, October 23 and Peter Barnes retired from the board on Sirtex Medical, Charter Hall Retail REIT and Seven Group August 27. Holdings moved off the list after appointing a female director: • Suncorp Group Limited appointed Sally Herman to the board on October 22. • Raelene Murphy was appointed to the Tassal Group Limited board on September 9. • Super Retail Group Limited appointed Launa Inman and Diana Eilert to the board on October 21. • Katherine Woodthorpe was appointed to the Sirtex Medical Limited board on September 22. Deletions • Susan Palmer was appointed to the Charter Hall Retail REIT • ASX Limited left the list on the retirement of Jillian Segal board on November 10. on September 1. • Annabelle Chaplain was appointed to the Seven Group • Insurance Australia Group left the list on the retirement of Holdings Limited board on November 24. Yasmin Allen on September 30. • Austal Limited and Altium Limited became part of the ASX • Kathmandu Holdings Limited left the list as they moved 200 in September; neither board have any female directors. out of the 200 into the ASX 300. Kathmandu still has • Ainsworth Game Technology Limited moved from the 200 40 per cent female directors. into the ASX 300. There are still no female directors on this • Cover-More Group Limited left the list in August as board. another male director Will Easton was appointed to the • Automotive Holdings Group joined the list after their only board, increasing the number of directors to 7 with 2 female director Tracey Ann Horton stepped off the board. female directors.

• Beach Energy was removed from the list in September as the Managing Director Robert Cole who was on temporary leave returned as a Non-Executive Director.

• GPT Group was removed from the list after a new CEO/ Managing Director commenced in September. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 5

ASX38 200 boards have reached the 30% target

2015 27 ASX 100 boards have reached 2

8 0 the 30% target

0 6

2 7 0 1 14 ASX 50 boards have reached the 30% target 7 ASX 20 boards have reached the 30% target

Just how close are we to reaching the 30% target?

28 30 104

HAVE NO NEED 2 OR MORE NEED 1 MORE FEMALE BOARD MEMBERS FEMALE BOARD MEMBERS FEMALE BOARD MEMBER

Female representation on ASX 200 boards

26% 26.2% in ASX 20

25% 25.5% in ASX 50 24.8% in ASX 100 24%

23%

22%

21.5% 21% in ASX 200

20% GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 6

30% Club update

The 30% Club working groups and the AICD have been busy during the last few months contacting the chairs of the ASX 200 and hosting meetings with the working groups that will be responsible for several key initiatives and priorities in 2016.

The overriding focus has been on signing up the chairs of the ASX 200 as members. As at 30 November, there are 52 chairs of the ASX 200 signed Patricia Cross up as members of the Australian chapter. These chairs have signalled their Australian Chair and Non-Executive Director, commitment to board diversity and to achieving a target of at least 30 per cent 30% Club female directors on their boards by 2018.

We want the chairs and boards of our largest public companies to be catalysts for change and role models for organisations and individuals across Australia. As there are currently 28 ASX 200 companies without any women on their board and 64 with only one female director, we know that we have a long way to go.

The names and photos of all current chair members are published on the Australian chapter pages of the 30% Club website, at 30percentclub.org/ about/chapters/australia#members

Rhian Richardson We have also included the list on the following page. Board Diversity Manager, We encourage everyone to connect with the 30% Club via our twitter account, Australian Institute of Company Directors @30pctAustralia and to read the latest international research and articles on the main pages of the website.

We look forward to further communicating our plans in early 2016.

To view our current Chair members and learn more about the 30% Club, please visit the 30% Club website at 30percentclub.org and the Australian chapter page at 30percentclub.org/about/chapters/australia. If you would like further information on the 30% Club or would like to support the Club in some capacity, please contact the Board Diversity Manager at AICD, Rhian Richardson at [email protected] GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 7

Chair members of the Australian chapter of the 30% Club

David Blight MAICD Raphael Geminder Kevin McCann AM FAICD Chair of the Remuneration Pact Group Holdings (Australia) Pty Ltd Macquarie Group Limited and Nomination Committee Japara Healthcare Limited Trevor Gerber Simon McKeon AO FAICD Sydney Airport Holdings Limited AMP Limited Paul Brasher MAICD Incitec Pivot Ltd David Gonski AC FAICDLife James McKerlie FAICD ANZ Banking Group Limited Drillsearch Energy Limited Geoffrey Brunsdon FAICD and Coca-Cola Amatil Limited Sims Metal Management Limited John Mulcahy MAICD Douglas Halley FAICD Mirvac Limited Gordon Cairns Duet Group Origin Energy Ltd Jacques Nasser AO FAICD and Woolworths Limited Neil Hamilton FAICD BHP Billiton Limited OZ Minerals Limited Michael Chaney AO FAICD Helen Nugent AO FAICD National Australia Bank Ltd, Peter Hay FAICD Veda Group Limited Woodside Petroleum Ltd Newcrest Mining Limited and Wesfarmers Ltd John O’Neill AO FAICD Rick Holliday-Smith FAICD The Star Entertainment Group Limited Harvey Collins FAICD Cochlear Limited John Prescott AC FAICD Navitas Ltd and ASX Limited Aurizon Holdings Limited John Cowin Leslie Hosking MAICD Dr Roger Sexton AM FAICD Domino’s Pizza Enterprises Limited Adelaide Brighton Ltd IOOF Holdings Ltd David Crawford AO FAICD Margaret Jackson AC FAICD Brian Schwartz AM FAICD Lend Lease Group Spotless Group Holdings Limited and South32 Ltd Insurance Australia Group Limited Stephen Johns FAICD Neil Chatfield FAICD Peter Scott MAICD Brambles Limited SEEK Limited Perpetual Limited David Kirk MBE Philip Clark AM Richard Sheppard FAICD Trade Me Group Ltd Shopping Centres Australasia Dexus Property Group and Kathmandu Holdings Limited Property Group John Shine Graham Kraehe AO FAICD Leigh Clifford AO FAICD CSL Limited QANTAS Airways Limited Past Chair of Bluescope Steel Limited Diane Smith-Gander FAICD Paula Dwyer FAICD Richard Lee FAICD Broadspectrum Limited Healthscope Limited Oil Search Limited and Tabcorp Holdings Limited Kathryn Spargo FAICD Graeme Liebelt FAICD UGL Limited Dr Robert Every AO FAICD Amcor Ltd Past Chair of Wesfarmers Limited Jeremy Sutcliffe MAICD Catherine Livingstone AO FAICD and Boral Limited CSR Limited Telstra Corporation Limited Craig Farrow FAICD Zygmunt Switkowski AO FAICD M2 Group Ltd Lindsay Maxsted FAICD Suncorp Group Limited Westpac Banking Corporation Richard Fisher AM MAICD and Transurban Limited David Turner FAICD InvoCare Limited Commonwealth Bank of Australia Jeremy Maycock FAICD Andrew Forrest AGL Energy Limited Robert Wright MAICD Fortescue Metals Group Ltd and Arrium Limited Super Retail Group Limited GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 8

Closing the gender pay gap: why reporting to the board is essential

The data on Australia’s performance on workplace gender equality in 2014-15 has been crunched and the clear message is that while progress is being made, more definitive leadership is needed.

Here are a few quick statistics:

• 24.0 per cent – the overall gender pay gap, showing that on average women Libby Lyons take home just three-quarters the pay of men, when salary, superannuation Director, and bonuses are taken into account. There is a gender pay gap in favour of men Workplace Gender Equality Agency in every industry, every occupation and at every level of management. The further up the corporate ladder, the higher gender pay gaps in favour of men.

• 27.4 per cent – the number of key management personnel positions held by women. This is an improvement of 1.3 percentage points (pp) over the past 12 months, but still shows that only about one in four senior managers across corporate Australia are women.

• 16.1 per cent – the number of organisations with a gender target for board composition. While there has been a small improvement in the number of female chairs, up 2.2 pp to 14.2 per cent, there is still less than one in four (23.6 per cent) female directors on Australian company boards.

The 2014-15 reporting data shows some small improvements. The overall gender pay gap has inched lower and women’s representation in management ranks has inched higher.

Encouragingly, we recorded measurable increases in employer action in support of gender equality. More employers now have a gender equality strategy. It’s still only about one in five, but a 2.3 pp increase equates to a jump from 796 to 962 organisations. We’ve also seen movement on flexible work, with 60.2 per cent of employers now offering formal policies and/or strategies to support employees working non-standard hours or across different locations.

But the pace of change is slow. We need leadership at the highest levels of organisations.

While we’re encouraged that 26.3 per cent of employers analysed their pay data for gender pay gaps in 2014-15 – an increase from 24 per cent the previous year – only about half of those who analysed their pay subsequently took action and less than 10 per cent of those who analysed pay reported the results to their board. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 9

This suggests that organisations aren’t treating gender pay Fatality and lost time injury rates are routinely reported equity as a business and governance priority. to boards and significant effort is applied to building a safety culture within organisations. Treating workplace At a minimum, conducting a gender pay gap analysis safety as a central business and governance issue has been involves interrogating base salary and total remuneration instrumental in driving a steady reduction in incidents. for roles of the same or comparable value by gender and assessing if there are any unexplainable or unjustifiable These days, it’s hard to imagine there was a time when differences in pay. Our 90 CEO Pay Equity Ambassadors boards didn’t concern themselves with employee safety. tell us gaps due to bias are commonplace – unless you Similarly, I hope that in the not-too-distant future we check your data and take action. can look back with astonishment that some boards didn’t Like-for-like pay gaps can be caused by a range factors recognise the enormous opportunities that pursuing including the relative negotiation power of men compared workplace gender equality and pay equity specifically can to women, a bias against part time staff (which are offer them. more likely to be women), and the tendency of working Australia has a highly educated female workforce, but mothers to be viewed as less committed to their careers that high level of skill isn’t translating into recognition while working fathers are viewed as more committed. and reward in the workplace. This comes at a big cost to These are just a few of the unconscious biases that can corporate Australia, which is missing out on many of the create like-for-like gender pay gaps and in turn dampen best and brightest employees Australia has to offer. employee morale and discretionary effort, while creating legal risks. Any board committed to building a high When organisations are creative and committed, they performing culture should be asking for the findings of can dismantle the barriers to women and men’s equal their gender pay gap analysis, interrogating the analysis participation in the workplace. There are many inspiring and understanding the actions taken. stories of employers implementing programs that support women and men to succeed at work as well as balancing Many leading companies are also analysing, disclosing and their caring responsibilities. They are making a difference. holding themselves accountable for their company-wide gender pay gaps, that is, the average salary of women However any serious effort to eliminate gender imbalances compared to the average salary of men. Analysing the and deliver more equal representation in senior drivers of this gap reveals where and when women drop management requires leadership and accountability for off the talent pipeline and in which lower paid roles they improvements on the critical metrics of gender composition dominate. Effective gender strategies will reduce the and pay gaps. company-wide pay gap by accelerating women through I look forward to seeing our annual workplace data the management layers into the top paying, traditionally improve year on year – but tiny increments aren’t enough. male dominated roles. Boards that understand what causes Significant change will only be made when boards make their company-wide gaps will gain a valuable perspective organisation-wide gender equality their business and hold into their company’s talent management practices and executive teams and management to account. corporate culture. Setting targets to reduce this gap and holding your executive team accountable to achieving targets will help to fast-track your progress to achieving gender equality.

When change is driven at a board level, the results can be powerful. Changes to the way companies now manage workplace health and safety are a good example. A spate of high profile disasters and the introduction of tougher laws in the 1980s, followed by more recent legislative amendments, combined to transform the way worker safety is managed by corporate Australia. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 10

Overcoming the gender gap in MBA study

Despite the numbers and percentage of women in the workforce continuing to grow, as well as increases in the percentage of women in middle management roles, the number of women enrolled in MBA programs has failed to keep pace with male enrolments.

MBA degree enrolments are 30 -35 per cent female, despite increases in the number of women completing postgraduate studies. According to the 2012 Michelle Wood Australian National Census, 46 per cent of women hold postgraduate degrees Head of Marketing and Communications, in 2011, up from 39 per cent in 2001. Significantly, in Australian universities Australian Institute of Company Directors women outnumber men completing study in every age group (Figure 1). PhD candidate, Macquarie Graduate School of Management Women outnumber men in every age group (MGSM) Number of men and women attending university by age group (2011)

15-19

20-24

25-29

30-34 These age groups are about two-thirds women 35-39 Field of existing qualiﬁcation for 40-59 year-old-women

Nursing 40-44 Teaching 45-49 Business 50-54 Human welfare 55-59 studies Behavioural 60-64 science 2,000 4,000 6,000 8,000 65+

0 50,000 100,000 150,000 200,000

Men Women

Source: Australian Financial Review, How Australians Study, 1 November 2012 GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 11

This is not an Australian problem – it’s a global issue. There Not surprisingly, the female respondents overwhelmingly is not one school in the Financial Times Rankings of Top 100 cited time and money as their two primary deterrents to business schools consistently reporting gender balance in MBA study, with flexibility the most commonly offered their MBA programs (Smyth, Financial Times, April 2014). solution. However, when asked if they would undertake MBA study if their employer told them they had leadership Throughout 2014, I worked with a research team to potential – the common response was an enthusiastic yes, interview over 40 women who have completed their absolutely. MBA or who have contemplated or taken a lengthy break (stopped or dropped out) from MBA study. Women see the time and money invested in themselves and I also interviewed their male counterparts, to identify an MBA education as a ‘sacrifice’ of time with their families the deterrents, barriers, challenges, motivators and and loved ones. Women also seemed to associate study time aids for women contemplating or having successfully as ‘me time’ whereas men associated it so closely with career graduated from MBA study. advancement that they saw it as necessary ‘work time’.

“ This is not an Australian problem – it’s a global issue. There is not one school in the Financial Times Rankings of Top 100 business schools consistently reporting gender balance in their MBA programs.”

The resulting study found that there are several potential Women are also seeking a faster and more immediate return causes of the MBA gender gap: on the $70,000 (average cost of an Australian MBA) invested in their education, as well as on the time invested. The fact • A view that the program itself is too competitive/ that they see very few women above them in the senior ranks masculine of their organization means they are skeptical about how • MBAs are not as strongly associated with career success realistic the ROI will be for them. by women The research found that the primary way to provide women • Work-life conflict issues are greater for women with a return on their investment post-MBA is by linking their MBA study with a leadership or career development • Lack of female mentors or role models in business pathway in the workplace. Further, the workplace needs to • Persistence of a gender gap in salary for male and provide support by offering flexible hours and peer support female MBA graduates, which limits the returns on for time off and study. human capital, financial and time investment made. To facilitate workplaces in doing this and based on the It found that the constraints women face in completing findings of this research, MGSM has developed and an MBA relates to the broader conflicts women face implemented the Women in MBA program (WiMBA) which in terms of managing their often multiple roles as the encourages diversity in leadership by partnering with primary caregiver and CEO of the household. They take corporate and government organisations to identify their top on a disproportionate share of the domestic labour (even female employees and support them through an MBA. if they are the main breadwinner) as well as a paid work Five of Australia’s leading business schools have now joined load. Women are also greatly impacted by the ‘glass the WiMBA program in a landmark partnership agreement ceiling’ which limits their career progression and earnings designed to tackle the gender imbalance in MBA study. potential post-MBA. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 12

“ Women see the time and money invested in themselves and an MBA education as a ‘sacrifice’ of time with their families and loved ones. Women also seemed to associate study time as ‘me time’ whereas men associated it so closely with career advancement that they saw it as necessary ‘work time’.”

The network of schools is committed to raising almost $20 Guidance and advice: The employer will pair recipients with million (in university and industry funds) to attract 320 new in-house mentors/sponsors to provide them with guidance, women into MBA programs over the next three years. support and advice throughout their MBA program and to help them develop a post-MBA career pathway. Curtin University, the University of South Australia, Monash Business School and Sydney Business School have combined A MBA has a significant impact on career pathways and with the Macquarie Graduate School of Management (MGSM) is particularly acute in driving middle-managers towards to deliver their Women in MBA program (WiMBA). This executive roles. The network aims to address the inequality WiMBA Network will make the WiMBA program available to at MBA enrolment level and impact the numbers of women women in South Australia, Wollongong, Melbourne, Sydney working in senior management, executive ranks and on the and Western Australia for the first time. boards of our leading companies.

More information visit mgsm.edu.au/WiMBA Key Elements of the Program

It is driven by an internal sponsor – a key employee of the corporate partner – who develops a process to determine WiMBA candidates on the basis that they are potential future leaders of the company.

Support from the employer takes three forms:

Financial: The WiMBA initiative offers scholarships to women to complete their MBA in a partnership with their employer. The network will match the contribution of the corporate partner dollar for dollar (up to 50 per cent). In order to qualify, the corporate partner must contribute a minimum of 15 per cent of the tuition fee per nominated recipient.

Over the next three years, the network has committed to setting aside $8.55 million in fee waivers. Matched to industry funds, this raises a total of $17.1 million to attract 320 new women into MBA programs.

On-the-ground: The employer will provide logistical and practical support to enable the recipient to attend class, undertake additional study and group work, and complete assignments. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 13

Interview with an ASX Chair: David Kirk

The Kathmandu and Trade Me group boards currently comprise over 30 per cent female directors. Do you feel there is a different board dynamic and decision- making process when there is more diversity on the board?

Yes, I do think there is a different dynamic with 40 per cent of the board being female (2 out of 5) compared to one female director out of five, which might be more typical. It is not a question of different skills but of different experiences and perspectives. Kathmandu for instance has a majority of female employees and the majority of our shoppers are female. A female perspective David Kirk mbe on the business is essential. Chair, Kathmandu Holdings Ltd What responsibility does the chair have in promoting board diversity? and Trade Me Group Ltd A lot. The chair leads the appointment of new directors and it is his or her responsibility to ensure there is appropriate diversity on the board as well as relevant skills and experience.

What advice would you give to a director wishing to transition from a non-executive director to a chair role?

It is important for the chair to be knowledgeable about the industry, to build a strong working relationship with the CEO, to have the confidence of other directors, to engage and involve all directors and to have the courage to make tough decisions. Be clear with yourself if you are capable of performing these roles, take advice from a chair you respect and be ready to learn in the job.

In your past you were involved in two quite male-dominated areas: sport and politics. What lessons did you learn in terms of encouraging female participation?

Male environments don’t have to be and shouldn’t be ‘blokey’ or boorish. Leaders need to set high standards of respect, courtesy and engagement on merit and to explain the importance of diverse experiences and a range of insights to driving top performance. Any bad behaviour needs to be jumped on immediately.

What policies and strategies do you think lead to a more diverse and inclusive workplace culture? What is the most effective way the board and the CEO/ Executive can work together to create this culture?

First, create an environment in which merit wins every time. Create a culture that champions talent and capability, not gender in the first instance. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 14

“ Create a culture Then the organisation needs good processes that reveal any unconscious bias and recognise that the opportunity for merit to be recognised is often that champions more difficult for women and other minorities. The best way for the board to encourage this is to appoint a CEO that ‘gets it’ and to discuss the issues talent and regularly with her or him. The board should walk the talk with an appropriate number of female directors. There should be no tolerance at all of inappropriate capability, not behaviour. gender in the What obstacles do chairs have to overcome to increase female representation on boards? Why can’t a board increase its size and appoint more female directors first instance. ” tomorrow or even over the next 12 months to get its female representation to 30 per cent?

Chairs need the support of their colleagues on the board and they need to deal with the inevitable inertia of the status quo. They need to lead the change and make it happen. In some cases it will take time to find the right mix of skills, experience and gender in a director, which is all the more reason to start immediately.

Can you describe the process involved in increasing board gender diversity? For example, if a board of ten only includes one woman, how long could it take to appoint more females, given the terms of existing directors and other requirements such as the skill matrix?

If there are directors on a board of ten that have been on the board for five or more years, which there surely would be on a board of that size, the opportunity to begin board renewal is available immediately. Five to six years is a good term for a director and director rotation is essential for healthy boards. In the situation described and assuming there is more than one director with a tenure of more than five years, then two appropriately skilled and experienced women could be on the board within 6 months to make it three out of ten.

Is it reasonable to argue that the vast majority of ASX 200 companies should have no problem increasing their female directors to 30 per cent by the end of 2018?

Yes.

Which female leader/colleague/friend or family member has inspired you the most in your career?

Brigit Kirk, my wife. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 15

Gender diversity – The new Game Plan at Wests Tigers

In September 2014, I was appointed Chair of the Wests Tigers NRL club as the result of a commitment by the code to increase gender diversity and upskill boards to reflect the challenges facing the modern game.

In its 2013-2017 Game Plan, the NRL identified women and girls as integral to the future of the game in the variety of roles they play from Marina Go fans to administrators of the game. Chair, At the time of my appointment, the Wests Tigers shareholder clubs, Wests Tigers Wests and Balmain, were looking to appoint three independent directors following a governance overhaul deemed necessary to change the fortunes of what had been a disjointed organisation. The new board would be composed of three independent directors, with an independent chair, and two representatives from each of the shareholders, resulting in a seven-person board. Of the three independents, the requirement was that one also offered gender diversity. Following a round of interviews, two female independent directors were appointed to the board of the Wests Tigers – first and foremost for the skills that we bring to the table – and we proudly hold the positions of Board Chair and Chair of the Audit and Risk Committee. Rosemary Sinclair is an outstanding director and the experience, insight and skill that she brings to the role of A&R Chair is world class. In an environment where sport is increasingly consumed via a mobile handset, I was appointed to the board for my digital experience and sports governance background. I had completed three terms as the first appointed director to the Netball Australia board and my executive role at the time was as CEO of Private Media, a digital media business that publishes news and business websites including Crikey, The Mandarin, Women’s Agenda and Smart Company. The Wests Tigers board currently comprises 40 per cent female directors and is aligned with the Australian Sports Commission’s gender diversity recommendation. The Wests Tigers is one of two clubs out of 16 with female chairs. The other female chair is The Gold Coast Titans’ Rebecca Frizelle. Half of the 16 NRL clubs have a female director, and three of those clubs now have two female directors. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 16

There is now one club, the Gold Coast Titans, with The group determined that the focus in the first three women on its board. There is one female year would be to implement early actions in the Commissioner, one woman on the board of NSW areas of game day experience, fan and membership, Rugby League and a female chair of the NT Rugby communications, branding and research with the League board. view to developing a program for 2016. So progress is being made but is it occurring fast Some early wins were achieved with game day enough to achieve a cultural change to a code experience and insight around purchasing drivers that suffers reputational issues in the corporate for merchandise. It became apparent that women sponsorship world and amongst the critical group experience entertainment differently to men so we of female decision-makers in the community? The are working with female stakeholders of the club current school of thought is that the tipping point to determine the drivers that would increase the occurs at the level of 30 per cent gender diversity in likelihood of their attendance at a game. We tested the boardroom and the NRL is still a long way from an event-style experience in a corporate box and achieving that. attracted a number of women who had never before attended a rugby league game. In June this year we launched the Wests Tigers Women’s Initiative with the view to attracting more The working group also engaged the female member women to the club. The Women’s Initiative is focused base in a survey and determined that quality and on ensuring women feel welcome, involved and valued design were more important than price in determining and we expect to derive economic benefit from the a purchasing decision about club merchandise. The strategy. path to purchase for men and women is different and understanding that should result in increased revenue. In terms of hard data, only 19 per cent of Wests Tigers members are female with current average female club As with a number of strategies at Wests Tigers we are membership across the NRL of 26 per cent. Growing at the beginning of a sustained, strategic approach the female members’ numbers will increase the overall that will result in: membership figure and impact the direct and indirect • Women feeling that they are respected and valued revenue lines. members of the Wests Tigers community It’s not just the total numbers of women that will be a • Opportunities for women to join in the camaraderie game-changer for the club. The messaging both within and sense of team spirit that comes with being a part the club and outside of the club regarding the attitude of our game towards women should have a positive impact on the club’s reputation, and potentially that of the game. • Recognition for the important role and contribution women make to our club and sport From a sponsorship point of view, the Women’s Initiative provides the club with a point of • More women involved with the club – from our fan differentiation in a market where there is little to base through to the board otherwise differentiate clubs. The Wests Tigers is an organisation committed to Plus, we will have the potential to sell more game-day increasing the numbers of women who engage tickets and merchandise to our increased membership with the club because there are clear benefits to and also engage with them across events and digital the community and, equally as important, it makes platforms that we aspire to develop into a significant economic sense to do so. source of new revenue. A working group was created to establish terms of reference. Participants included representatives from the board, senior management, players’ wives and girlfriends, members and sponsors. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 17

The ultimate game: the game of business for HR

Despite the recent attention-grabbing Harvard Business Review (HBR) headline It’s Time to Blow up HR, I wouldn’t send flowers just yet.

The Human Resources (HR) discipline has always had its fair share of detractors.

Why ?

HR often deals with the finality of situations such as company closures, employee Professor Petrina Coventry exits and decisions that may be perceived as negative. It plays the role of the Industry Professor, ultimate umpire on tough calls and we all know that not everyone loves the University of Adelaide umpire’s decision, or even the umpire. But if you want a fair game, you need an Non-Executive Director, umpire. You certainly want one that knows the rules, has the courage to make Beston Global Foods the calls and is not compromised when under pressure from the crowd.

Non-Executive Director, However, I agree with the intent of the HBR article where it points out that the Australian Human Resource Institute game has changed for HR. Just as the game has changed for business too.

Non-Executive Director, The playing field Australasian Association of Philosophy To be effective, HR must understand the full value chain of the business, otherwise they cannot:

• Plan effectively i.e. they won’t understand who does what

• Guide and measure productivity i.e. show them what they need to do and to what degree

• Drive the right economic models i.e. how many people, at what rates and for how long

• Ensure a healthy organisation culture i.e. the capacity to judge how hard and fast or slow and steady the organisation needs to act.

To be a good umpire HR needs to understand and articulate the business model, the value chain and the issues in real business terms, but still maintain enough independence to see red flags and not be compromised by being too close to the business.

One also needs to consider the changing risk profile of most businesses – shaped by increasing competition and security concerns – often driven by radically disruptive new technologies. Social media changes the organisational dynamics and brand equation. So risk management is a large part of the HR practitioner’s new remit. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 18

Given this, it is critical to have at the board table a That gap can be explained by the difference between person of independent mind who can tell you where rule-based organisations and values or principle-based the organisation is broken, where it is working well, organisations. It is the gap between what you have to do where it has bottle necks or where it is at risk of and what you should do. The law currently cannot keep up breaking. It is like having a canary in a coal mine. with social change and innovation which means that good judgement and good decision making must fill that gap. LBW, googlies and spit balls Big headline-grabbing company failures are often less Most well run and established companies have a multitude attributed to financial failure than they are to poor of protective policies in place as part of an overarching leadership, bad decisions, a cultural disaster, or lack compliance program. Yet many successful companies of oversight. continue to fail despite those policies. A recent example HR plays a lead role in influencing good leadership and is Volkswagen which will no doubt command the MBA good governance to ensure a responsible, thoughtful and case study space for years to come. However, whatever insightful organisation is in place. may be written, one conclusion is clear. As the Executive Director of the Ethics Centre, Dr Simon Longstaff recently Governance has its need for rules. However, it is also observed, the catastrophe for Volkswagen is the result of grounded in psychology and biases are the blinkers that “divorcing technical mastery from ethical restraint”. can blind us all.

“ The law currently cannot keep up with social change and innovation which means that good judgement and good decision making must fill that gap.”

Circumstances like these are leading investors to apply Did the leaders at VW think that it paid to ignore increasing pressure on organisations to prove their ethical their own code of ethics (motivational blindness)? merit. The growth in Total Assets under Management Did they think that they were safe by delegating (TAUM) through responsible investment funds grew over the work to a third party to remove the onus 500 per cent over the last three years. Such concerns are (indirect blindness)? becoming mainstream1. Did they surround themselves with followers who Responsible investors look beyond financial risk. They merely agreed with them and did not challenge their acknowledge that investment value is driven by many decisions and direction (confirmational bias)? issues off the balance sheet including company culture, management, brand value, good governance, quality Codes and rules are the ‘hardware’ around governance. control, pollution control, occupational health and safety, However, the quality of the ‘software’ is equally critical. good human resources practices, stakeholder management How those rules are applied to create a healthy climate, and more – all of which are ultimately linked to and one where individuals can challenge the system and each shaped by a corporation’s ethics. other without threat or compromise, is the key. Rules alone will not keep individuals or companies safe. Despite all those similar cookie cutter policies and codes that make up most compliance programs, some companies Developing a strong ethical quotient amongst leaders sail through and some don’t make it. Why? There is a gap. (indeed across an entire organisation) is critical.

1 http://responsibleinvestment.org/wp-content/uploads/2015/08/2015_Benchmark_Report_Aust_FINAL.pdf GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 19

CHROs are not there merely to follow orders from above; HR is held accountable for the development of C Suite they also need to point out strategies that may have negative and CEO talent and research conducted over a number of human resource or reputational repercussions for the years by Ellie Filler, senior client partner at Korn ferry and company. This may at times need to draw on a strong sense Dave Ulrich, professor at University of Michigan, reveals of independence to raise issues directly with the board. striking similarities in competencies, personal traits and leadership styles of CEOs and CHROs. This reinforces the The true test of future CHROs will be that of moral potential and necessity of HR. courage. This is a test of strength and of intellect. They need to be a role model and know how to identify Umpire accreditation and deal with ethical issues and educate others on the moral perspective to ensure they can do the same. If you want to play, play fairly, and win, then you want a professional, well-trained umpire who is certified to make Avoiding a strike those early tough calls without compromise.

The last decade has seen a plethora of regulation applied There is no question that as the game of business as a result of the GFC including the war on executive continues to evolve with new rules, umpire retraining is remuneration with the ‘say on pay’ trend and the inclusion required. A professional standards certification process of ‘No’ votes around executive remuneration as the has been activated by the Australian Human Resource ultimate measure of shareholder sentiment. Institute (AHRI) to ensure that HR Practitioners can meet the necessary standards required for the profession. Executive remuneration has become increasingly complex and risky. Due to this shift, HR landed fairly and squarely HR is increasingly playing a professional role at the C Suite in the middle of the board room. It solved the final and board level. Their remit is changing and the need for question for some of what the function can formally boards to have a professional umpire on the field is going contribute at this level beyond ‘symbolic capital’. If anyone to become even more critical. has experienced the nail biting experience of the AGM exec rem vote, then they know what it means to have good HR representation in executive remuneration. For some in HR that requires new skills, competencies and education.

Scores on the board and a home run

Women remain under represented within senior ranks. Despite years of investment and many initiatives, female participation within C Suite and Key Management Personnel (KMP) in Autralia remains low compared to other countries.

Less than 10 per cent of ASX 500 company KMPs are women.

KMP categories with representation greater than 10 per cent of females are occupations with a higher proportion of women graduates for example HR, law, and public relations.

At the current count amongst ASX 500 companies, HR has the greatest number of female executives represented and also a higher number of female executives versus male executives, currently at 56 per cent women. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 20

Gender diversity: One shareholder’s view

Shareholders have long recognised that board effectiveness is critical for company success.

By governing well, good boards will successfully navigate companies through a range of risks and opportunities and thereby generate superior results for their many stakeholders.

Karin Halliday We believe that over the long-term, companies are far more likely to thrive Senior Manager, Corporate Governance under the leadership of a cohesive board of skilled directors who can draw on AMP Capital Investors their broad experience and perspectives to provide sound direction. Simple! Or is it?

Unfortunately, while it is easy to talk about needing ‘good’ boards, defining what such a board looks like is less simple. What is the key ingredient for a good board? Is it the number of ex-CEOs on the board? The number of directors with relevant industry experience? The number of independent directors or the number of wise old men?

AMP Capital has long pondered the answers to these questions. We believe that board effectiveness is the most important governance issue for shareholders so it is crucial to consider the combination of skills and time each director brings to the table, as well as their ability to act independently and in the best interest of the company and its shareholders.

What does good board composition look like? Most likely it is a combination of:

• A cohesive group of individuals with integrity, able to commit the required time to the task

• A group able to act independently of management, providing a sounding board and also a cross-check on behalf of shareholders

• A skilled group, able to bring diverse experience and perspectives to decision- making.

Missing from these criteria is a need for white, male, ex-CEOs. Yet for many years, the term “pale, male and stale” provided a fairly accurate description of the characteristics of the majority of Australian company directors. In fact in 2000, my first year as AMP Capital’s Manager, Corporate Governance, I noted the homogeneity of directors on Australian boards and simply accepted that all-male boards were the norm. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 21

Today investors see this differently. After initially accepting poor diversity as ‘normal’, we progressed through phases of seeing improved gender-diversity as the ‘right’ thing to do and then the ‘smart’ thing to do. Now, diversity is the ‘only’ thing to do. It is finally becoming the norm.

What investors see

In 2010, we were appalled to find that 60 per cent of the Australian companies we invested in on behalf of our clients had no women directors on their boards. From then on we raised the issue of gender diversity every time we engaged with company chairmen. Since that time, we have continued to monitor and report on gender diversity across the Australian companies we hold.

Our work coincided with the introduction of the ASX Governance Council’s guidelines on gender diversity and the commencement of the AICD’s mentoring program.

There has been some improvement. In 2010, 60 per cent of companies we held had no women directors. In 2015 this number has fallen considerably to 21 per cent. While this improvement should be applauded, the fact remains that 20 per cent of Australian companies held by AMP Capital still have no women directors.

Fewer boards now have no women directors

10 2010 2011 2012 2013 2014 2015

Boards with no women directors Boards with 1 woman director Boards with 2 or more women directors

While there has been a steady increase in women directors over the last five years across our sample of companies, Australia still falls well short of the 30 per cent target set by the newly formed Australian branch of the 30% Club. As a result of recent appointments, women now fill just over 20 per cent of all board seats. However, it would be necessary to appoint more than 250 additional women before the 30 per cent target would be met. GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 22

Percentage of board seats ﬁlled by women

20.2% 17.9%

14.1% 12.7% 10.5%

7.7%

2010 2011 2012 2013 2014 2015

For those who consider that progress has been too slow, it pays to remember that in the last five years alone the number of individual women taking on board roles at Australia’s largest companies has increased by almost 50 per cent from 185 to 254 women.

Number board seats held by each woman director*

254 Individual women directors 254 250

200 185

183 150 164 146 131 100

0 2012 2013 2014 2015

1 board seat 2 board seats 3 board seats 4 or more board seats

*Sample = Australian companies held by AMP Capital GENDER DIVERSITY QUARTERLY REPORT – VOLUME 2 companydirectors.com.au 23

“To assist our clients in achieving the returns on their investments that they expect, we seek high standards of transparency, corporate governance and social responsibility from the companies in which we invest. To this end, we monitor and enter into dialogue with companies with regard to key aspects of their corporate governance and their relationship with society as a whole.”

AMP Capital

Does gender diversity matter? Next steps

AMP Capital admits that while we first raised the issue of As a keen advocate for increased gender diversity on poor gender diversity with company chairmen from the boards, AMP Capital has often raised the issue in our perspective of it being the socially ‘right thing to do’, we engagement with company chairmen. We have also felt uncomfortable doing so. We asked ourselves if it was consistently raised it in in our bi-annual Corporate really in the best interests of our clients to promote gender Governance Report and discussions at public forums. diversity. Would it help the performance of their portfolios Most recently, AMP Capital joined the Investor Group if companies had more gender diverse boards? We resolved of the 30% Club. to research the issue and we have consistently found there To date, we have not resorted to voting against the to be a positive correlation between the number of women re-election of directors at companies with zero or little directors on a company’s board and the level of concern gender diversity. However, we may consider this action we had with regard to governance issues. Interestingly, in the future, particularly where companies have companies with poor gender diversity were also the consistently had no female presence on their board or companies where red-flags were raised in relation to their cannot show evidence of an attempt to address this issue. audit, general board composition, remuneration (both quantum and structure), and also the tendency for the We acknowledge that improved gender-diversity will company to engage in related-party transactions. not be the panacea for all concerns around board composition. However, we do look forward to the day While it appears that companies with fewer women when all shareholders can be confident that the directors directors tended to fall short on other governance factors, representing them on company boards will no longer be this relationship was less prevalent in 2015 than in drawn from the ‘male-only’ pool. previous years. Perhaps this is sample bias as far fewer of the companies owned by AMP Capital now have no women directors. For more information please contact t: 1300 739 119 e: [email protected] w: companydirectors.com.au/boarddiversity

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