ACSI Voting Report
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Australian Council of Superannuation Investors Board Composition and Non-executive Director Pay in ASX200 Companies ACSI Annual Survey of S&P/ASX200 Board Composition and Non-executive Director Remuneration November 2016 About ACSI The Australian Council of Superannuation Investors (ACSI) is a collaboration of Australian superannuation funds and international asset owners, bound together by their common interests as long-term investors in the capital markets. The focus of ACSI’s research, policy and representation is environmental, social and governance (ESG) investment risks and opportunities. ACSI has 29 Australian superannuation fund members, who collectively manage over $450 billion in assets on behalf of over eight million Australian superannuation fund members and retirees. ACSI’s six international members are among the largest and most respected asset owners globally in terms of their approach to corporate governance. The Australian Council of Superannuation Investors Ground Floor 215 Spring Street Melbourne, 3000 Website: www.acsi.org.au This research report was compiled with the assistance of, and from data compiled by, Ownership Matters. About Ownership Matters Ownership Matters is an Australian governance advisory firm. Its principals have collective experience of over 30 years in advising institutional investors on governance issues at ASX listed companies. Ownership Matters Pty Ltd Level 5 167 Queen Street Melbourne, 3000 Website: www.ownershipmatters.com.au Foreword It is more than a decade and a half now since ACSI began its annual study of who controlled Australia’s largest companies, and how they remunerated themselves. Back then, the boards of the ASX100 were, as we noted and lamented, truly ‘male, pale and stale’. Times have changed – ACSI expanded its work to look at the top S&P/ASX200, and Australia’s boardrooms began to expand their horizons, looking just a little beyond their traditional work and sporting networks for fellow directors who could bring the appropriate skills and capabilities to boardrooms. While the gender make-up of these boards in leading companies is still overwhelmingly male, almost a quarter of all board seats are now occupied by women – and ACSI is intent on working with its membership, in raising that to at least 30% by the end of 2017. ACSI’s members have recently endorsed a voting policy for 2017 that will reject male board candidates from companies with no women directors if those boards have not committed, or articulated, a way forward to review and renew their membership. Pleasingly, the ASX100 sits on the cusp of achieving that 30% target, with only one company lagging its peers. In the past year, women have comprised more than 40% of all board appointments in the ASX200 – not just a record level, but a ratio which puts the lie to those many companies which have resisted change with arguments revolving around the lack of suitably qualified women. When companies finally create the conditions in which diverse workforces can flourish, and redress gender pay imbalances, that pool of qualified women will grow even larger. It is also pleasing to note that the number of directors with no skin in the game fell last year. It’s to be hoped it will continue to fall over coming years, as a number of those directors have held their seats for less than a year and the time may not have been right for them to invest. ACSI members believe that all directors should have sufficient skin in the game to provide alignment between both director and investor interests, and I find it remarkable that there are still two directors of 20 years standing who own not a single share in the company over which they preside. This series of longitudinal research has been extremely valuable as we engage with Australia’s listed companies, and this latest will prove as useful. Louise Davidson Chief Executive Officer Table of contents About ACSI .................................................................................................................................................. 2 Foreword ...................................................................................................................................................... 3 Table of contents ........................................................................................................................................ 4 Executive summary .................................................................................................................................... 5 New appointments: ................................................................................................................................. 5 Gender diversity: ..................................................................................................................................... 5 Multiple directorships: ............................................................................................................................ 6 Director shareholders – ‘skin in the game’: ........................................................................................ 6 Age and tenure: ........................................................................................................................................ 7 Director fees: ............................................................................................................................................ 8 Methodology ............................................................................................................................................... 9 Aggregate board statistics ...................................................................................................................... 10 Executive and non-executive directors ............................................................................................. 11 Proportion of board seats held by Independent Directors ........................................................... 12 Reasons for classifying non-executive directors as affiliated ....................................................... 13 Board composition by gender ............................................................................................................. 14 Professional non-executive directors ................................................................................................ 17 New entrants to the ASX200 director pool ..................................................................................... 19 Incidence of executive directors holding multiple directorships ................................................. 24 Board leadership ....................................................................................................................................... 25 Director age ............................................................................................................................................... 27 Tenure ......................................................................................................................................................... 29 Executive directors ................................................................................................................................ 29 Non-executive directors ...................................................................................................................... 30 Average board tenure ........................................................................................................................... 30 Remuneration of non-executive directors .......................................................................................... 31 Average pay ............................................................................................................................................ 31 Remuneration of non-executive directors holding four ASX100 directorships ....................... 32 Remuneration of non-executive directors holding four or more ASX200 directorships ............... 33 Remuneration of non-executive directors holding three ASX100 directorships ..................... 34 Skin in the game ........................................................................................................................................ 36 No skin in the game ............................................................................................................................... 37 Appendices Appendix A: Board size .............................................................................................................................................. 39 Appendix B: Executive and non-executive directors ........................................................................................... 40 Appendix C: Independent directors ......................................................................................................................... 41 Appendix D: Gender ................................................................................................................................................... 42 Appendix E: Professional non-executive directors ............................................................................................... 43 Appendix F: Directors’ ages ....................................................................................................................................... 44 Appendix G: Non-executive director remuneration ............................................................................................. 45 Appendix