A report from Apollo Communications has analysed the remuneration, credentials and independence of ASX board directors.
The 563 non-executive directors across the ASX 100 are reported to be paid a collective $176 million a year, or $1.76 million per company on average. As a group, the 100 largest ASX-listed companies are worth $1.7 trillion and employ up to 3 million workers.
The best paying ASX boards were found to not necessarily be with the largest companies – BHP topped board pay (third in market cap), followed by ResMed (51st by market cap), Macquarie (seventh in market cap), Rio Tinto (12th by market cap] and NAB (fifth in market cap).
The three highest-paid single-board directorships in the ASX 100 belong to Rio Tinto chair Simon Thompson ($1.6 million), former AMP acting chief executive Mike Wilkins ($1.5 million) and BHP chairman Ken MacKenzie ($1.7 million).
The best-paid non-executive board director across the ASX 100 is Woolworths chair Gordon Cairns, who collects earnings of $1.8 million from directorships across Woolworths, Macquarie and Origin Energy.
Former Westpac chair Lindsay Maxsted followed, with his earnings of $1.6 million from the bank as well as Transurban and BHP.
The report has also ranked board pay against market capitalisation of all ASX 100 companies in an effort to see which boards and which industries are paid more or less than their market size dictates.
Magellan and real estate investment trust GPT Group were named as having two of the top 10 best value boards in Australia, alongside other companies such as Afterpay Touch, Coles Group and Xero. Global biotech company CSL and gold miner Newcrest Mining were ranked as the best value boards.
In contrast, AMP, Challenger, Link and BOQ were among the highest remuneration-to-market cap ratio boards, alongside others including Virgin Money UK, Star Entertainment Group and Soul Pattinson.
However banks were rated among the best value industries, paying their boards less than what their market size would dictate. In comparison, diversified financials, insurers and real estate companies were among the industries with boards for the least value.
Although QBE chair Mike Wilkins earned $2 million through his directorships with the insurer as well as AMP and Medibank, the Apollo reported this was distorted by his short-term tenure as acting CEO for AMP.
Apollo chief executive Adam Connolly stated that despite the UK corporate governance guidelines suggesting the maximum tenure should be no more than nine years, in some cases, individuals will sit on four ASX-listed boards simultaneously, while others will have served for up to 45 years on a board.
Another observation he has is that the coronavirus outbreak will impact board activity.
“One interesting outcome of Australia’s economic engagement with the world is the rise of the fly-in fly-out director, with one in five of Australia’s ASX 100 directors living offshore, and either phoning in for board discussions or attending in-person,” Mr Connolly said.
“In a world physically shut down by the coronavirus, telecommuting for board directors could become commonplace.”
Mr Connolly stated while non-executive directors are well paid, they do place their own personal reputations on the line serving the country’s largest boards and they are also exposed to financial liability if things go wrong.
“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,” he said.
The gender pay gap is also prevalent in the ASX 100 boards, with male directors earning 20 per cent more on average than their female colleagues ($263,144 for the average male salary versus $218,696 for women).
The director pay gap does narrow at the chair level, with male chairs earning 14.7 per cent more than female chairs on average ($502,516 versus $437,990).
Surprisingly, the report found the most common degree for non-executive directors is a bachelor of arts, compared to a bachelor of science for CEOs.
The median age of directors is 60, with Apollo noting the “tail end of the Baby Boomer generation retains oversight of our corporate institutions”.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
