A board review: the top 100 companies on the ASX

Thursday 30th April 2020 Justin Cleveland

Corporate boards provide guidance and vision for the companies they represent. They’re responsible in equal measures for the successes and the failures.

In extraordinary times, like we’re currently experiencing - times without a precedent or roadmap - boards are trying to find their way.

Last week, ASIC came out with a statement around the role and responsibilities for directors, reminding them that they should not only look at the long-term future of the organisations they represent but also consider the needs of a variety of stakeholders, like suppliers and staff. It was a veiled way of saying that we’re all in this together.

While we’re all largely looking to government for answers to the health and economic crises, large corporations are making decisions that have wide-ranging ramifications. Apollo Communications has released a report looking at who these decision-makers are, addressing the often-contentious issue of remuneration.

As they observe in the report, “Australia’s corporate response to the COVID-19 global pandemic is being led by 563 people”. The companies are worth a collective $1.7 trillion and employ upwards of three million people.

“These people run Australia’s 100 largest companies, and are the key decision-makers in the country’s corporate response to the greatest economic threat since the Great Depression.”

What’s remarkable is that, with few exceptions, everyday Australians have no idea who makes the decisions behind the brands they use regularly. If possible, they know even less about how they are compensated.

Highlights from the report

The best-paying board is not necessarily the largest company. The top compensation comes from BHP (3rd by market cap), Resmet (51st), Macquarie (7th), Rio Tinto (12th) and NAB (5th).

Collectively, the 563 directors are paid a collective $176 million per year, which averages to $1.76 million per company. “Non-Executive Directors are paid just 0.01 per cent annually of the market capitalisation of the ASX- companies they oversee, suggesting they provide fair value for the responsibility they take on,” said Apollo CEO Adam Connolly.

There is no standard term for a board member, though contemporary governance guidelines suggest the maximum tenure should be no more than nine years. In one case, a director has served on a single board for more than 45 years, Ramsay Health Care’s Michael Siddle.

The highest-paid board director is Gordon Cairns, who earned $1.7 million from directorships on Woolworths, Origin Energy, and Macquarie, followed by Lindsay Maxsted with $1.6 million from Westpac, Transurban, and BHP.

This crossover of serving on different boards is remarkably common, the Apollo report reveals. “In some cases individuals sit on four ASX-listed Boards simultaneously,” said Connolly.

Want to get on a board? The most common degree is a generalist Bachelor of Arts degree for non-executive directors. “The University of Sydney is the ‘Directors Club’, educating more ASX-100 Board members than any other, followed by the University of Melbourne. This compares to the University of NSW, which has educated more senior CEOs than any other, making it the ‘Power University’.”

The median age of a director is 60, with the youngest director checking in at 33 and the oldest at 80.

Addressing the gender pay gap

Australians are doing significantly better than their American counterparts in ensuring that women are represented on boards. In the US, women hold just 19% of board seats on the S&P 500 index

The report did highlight that male directors are aid 20% more than female directors on average, Male directors made around $263,000 for their positions while women made $219.

The gap narrowed slightly for remuneration of chair positions. Women were paid an average of $438,000 for chair positions while men averaged $502,000, 14.7% more.

Do boards need to meet on-site?

Like how staff have learned to adapt to remove working boards have also made the change. “One interesting outcome of Australia’s economic engagement with the world is the rise of the Fly-In-Fly-Out (FIFO) Board Director, with one in five of Australia’s ASX-100 Directors living offshore and either phoning in for Board discussions or attending in person.

“In a world physically shut down by the Coronavirus, telecommuting for Board directors could become commonplace,” said Connolly.

Full report

You can check out the full report, which includes breakdowns by industry, sector, market cap, and a host of other criteria, at apollocommunications.com.au/board-report

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