ACSI has released its annual 2014 study into Board Composition and Non-Executive Director pay among ASX 200 companies, which provides insights into gender, board size, independence, new entrants, tenure and director fees.
ACSI’s key findings are as follows:
There is a trend among Directors to sit on multiple company Boards, with 105 Directors taking up one-third of all ASX 100 Board positions
Yet there is evidence that the Director gene pool is expanding, with 89 Directors appointed to ASX 100 Boards in 2014. Of these appointments, only 46 were new to the ASX 100 pool. Banking and finance was the most common background for the new Directors, accounting for 14 appointments.
New appointments also reflect a market focus on gender diversity. 37% of new Director appointments in the ASX 100 were women, although this trend was less evident in the ASX 101-200, with women accounting for 23% of appointments.
ACSI Chief Executive Officer Louise Davidson has stated that although the number of women on the Boards of Australia’s largest companies is rising, it is still not up to standard. The survey found that women hold under 23% of directorships in the ASX 100, and under 14% of Board positions in the ASX 101-200.
There is a widespread mood for change, however, noted Ms Davidson.
This is the second year in a row that ACSI has analysed Directors’ ‘skin in the game’, or shareholdings in the company they preside over. It found that nearly 11% of ASX 100 Non-Executive Board seats are held by Directors with no shares in the company. In the ASX 101-200 sample the number was higher at 18%.
ACSI believes this is a “poor result”, and hopes to see improvement in the future. Although it does not mandate how many shares a Director should own, it encourages ‘skin in the game’ as a means of aligning Directors more closely with their investors.
Age and Tenure
The average age of Non-Executive Directors in ASX 100 companies was 63.8 years, and the average tenure was 6.9 years (an increase from 6 years in 2013).
ACSI also found evidence of generational change. Overall, 62% of women on ASX 200 Boards are aged 50-60, while only 27% of men are in the same age bracket. This is also reflected by the increase in the average age gap between male Executive and Non-Executive Directors (55.8 and 63.8 respectively) to almost 10 years, which is evidence of an increase in the number of retired Executives in the Non-Executive cohort. In contrast, the gap between female Executive and Non-Executive Directors was much less at three years.
Average fees for ASX 100 Non-Executive Directors increased from $215,469 in 2013 to $217,196, whereas Non-Executive Chairman fees declined by 3.5% from $477,226 in 2013 to $460,451.
The report also observed a decline in Non-Executive Director fees in ASX 200 companies by 4.3%, leading to an average fee of $132,292. Egan Associates believe that this circumstance is likely to have arisen by movement in and out of the ASX 200 contributed substantially by market volatility and the impact of commodity prices in both the resources and energy sectors.