Investors and shareholders have long had a sneaking suspicion that a "club" exists when it comes to choosing ASX listed directors. Now it appears there is proof.
Amid the reluctant (and limited) bloodletting at Crown Resorts' annual meeting last week, the board ructions at Boral and the looming annual meeting season, large investors are becoming increasingly fed up with the lack of talent on boards of ASX-listed companies.
The same Davids, Peters and Johns (and a few Susans) are finding their way onto boards of major listed companies over and over again, leading to new calls from powerful advisory groups for yearly elections of directors rather than the current system in which directors stand for re-election every three years.
Ownership Matters found Australian company directors are drawn from a small pool of people, which may not have the skills necessary to get the best out of companies. Credit:Shutterstock
A landmark report by governance advisory group Ownership Matters has reviewed all director appointments to ASX300 companies since 2005 and found directors are frequently sourced from the same pool of directors and often are not up to the job.
While gender diversity has improved considerably — women now make up 30 per cent of board positions — the rate has flatlined. At the same time, the club effect has carried over to female board representation, meaning the same women are favoured for board roles rather than new blood.
Ownership Matters co-founder Dean Paatsch says it's up to investors to pull their weight if they want more competition and greater accountability from the non-executive director labour force.
"There is a huge performance dividend waiting for the Australian economy if we have the most competent boards possible deploying the capital of Australian investors."
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