Which boards are delivering value for money?
When it comes to getting value for money from their boards, shareholders in Magellan Financial Services have little to complain about while shareholders in AMP Limited might have some questions to ask.
The boards of Challenger, Link Group and Bank of Queensland may also have to look to their laurels.
That appears to be the bottom line of new research conducted by Sydney-based firm, Apollo Communications which ranked the market capitalisation of all Australian Securities Exchange (ASX) 100 companies and analysed which boards within which industries were paid more or less than their market size dictated.
And, interestingly, the financial services industry through up some stark contrasts which were pointed up by Apollo’s chief executive, Adam Connolly.
“When board remuneration is ranked against company size, the top 10 best value boards in Australia are CSL, Newcrest Mining, Magellan Financial Group Limited, Coles Group, GPT Group, Afterpay Touch, Xero Limited, Sydney Airport, the a2 Milk Company and Sonic Healthcare,” Connolly said.
“In contrast, the top 10 highest remuneration-to-market-cap ratio boards in Australia are Virgin Money UK, AMP, Resmed, Bank of Queensland, Link Group, Star Entertainment Group, Soul Pattinson, Worley Parsons, James Hardie and Challenger.”
“In some cases, individuals sit on four ASX-listed boards simultaneously, while others have served for up to 45 years on one board, when contemporary governance guidelines suggest the maximum tenure should be no more than nine years,” Connolly said.
He also noted that one of the interesting outcomes of Australia’s economic engagement with the world was 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.
The Apollo research revealed the best paying Boards in Australia were not necessarily the largest. They were BHP (3rd by market cap), Resmed (51st by market cap), Macquarie (7th by market cap), Rio Tinto (12th by market cap) and NAB (5th by market cap).
It named the highest-paid board director as being Gordon Cairns who had earnings of $1.8 million from directorships on Woolworths, Origin Energy and Macquarie, followed by Lindsay Maxsted ($1.6 million) from his service with Westpac, Transurban and BHP.
The research found that, although Mike Wilkins earned $2 million through his directorships with AMP, QBE and Medibank, this was distorted by his short-term tenure as acting AMP CEO.
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