Board composition and NED pay

Wednesday, 11 November 2015


    A new report from the Australian Council of Superannuation Investors maps changes in director fees, gender, tenure and age in Australia’s leading boardrooms.

    Despite a 10.4 per cent increase in fees for ASX 101-200 chairs, these chairs still attract $200,000 less per year than their ASX 100 counterparts.

    The findings from the most recent annual report from the Australian Council of Superannuation Investors (ACSI) into the composition of ASX 200 companies found that average fees for ASX 100 non-executive directors have increased slightly from $215,469 in 2013 to $217,196, whereas non-executive chair fees declined 3.5 per cent from $477,226 in 2013 to $460,451.

    Smaller companies moved in the opposite way, with ASX 101-200 non-executive chair fees increasing by 10.4 per cent to $256,013, compared to a 4.3 per cent decline in NED fees to $132,292.

    The ACSI research maps changes in director roles, gender, director fees, tenure and age.

    For the third year in a row, the study includes an analysis, not only of the new entrants to the ASX 100 and ASX 101–200 director pools, but also of their backgrounds. It examines executive director appointments during the sample period, including the circumstances of new appointments and whether appointments were internal or external.

    Expanding the director gene pool

    ACSI's research highlights a trend amongst directors to sit on multiple company boards. In fact, 105 directors take up one-third of all ASX 100 seats.

    The review of new appointments shows that there was a marked increase during this period. There were 93 new director appointments filled by 89 individuals, up from 72 appointments in the previous period – the majority of which were non-executive directors (NEDs).

    In the ASX 100, the average tenure of executive directors increased to 6.9 years, while the average age tenure of NEDs was slightly lower at six years.

    Interestingly, previous experience of the 46 new entrants who filled 49 NED positions varied considerably. Some were shareholder nominees; others were current executives at other companies. The pool included a number of former lawyers and audit partners. At least 19 of the new entrants had prior international experience.

    Of the new appointees, banking and finance was the most common background for directors, accounting for 14 appointments to ASX 100 boards. Chief executive roles and accounting experience remain common backgrounds. Of the 82 directors appointed to ASX 101-200 companies, just over half (42) had never been a director of an S&P/ASX 200 company.

    Gender diversity on boards

    Gender diversity on boards remains a key focus area for investors.

    Over the past 10 years, the proportion of board seats held by women at ASX 100 companies has doubled, increasing to nearly 23 per cent in 2014, with 131 women holding 179 board seats.

    Women are also behind a generational shift on boards with 62 per cent of women aged 40-60, with 27 per cent of men in the same age bracket.

    ACSI, like the Australian Institute of Company Directors (AICD), is supportive of clear gender diversity targets that aim to lift the representation of women on the boards of ASX 200 companies to 30 per cent – a standard catalysed globally by the work of the 30% Club.

    The progress made to increase female representation around ASX 200 boardroom tables is examined in the AICD's Gender Diversity Quarterly Report.

    For more information, download ACSI's report, Board Composition and Non-Executive Director Pay in ASX 200 Companies.

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