2010 board of directors study

2010 Board of Directors Study Australia and New Zealand

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Contents

Table of contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

About Korn/Ferry International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

About Egan Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Editorial comment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Non Executive Chairmen and Non Executive Directors fees . . . . . . . . . 11 Australia

Board demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Australia

Board committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Australia

Non Executive Chairmen and Non Executive Directors fees . . . . . . . . . 22 New Zealand

Board demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 New Zealand

Board committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 New Zealand

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About Korn/Ferry International

Since our founding in 1969, Korn/Ferry International has been the executive recruitment industry’s leader and innovator, and today has evolved as the world’s premier provider of talent management solutions . More companies around the world trust Korn/Ferry than any other firm to deliver and develop the best executives to run their organisations, a responsibility we take seriously and work every day to meet with integ-rity and results .

Our executive recruitment professionals conduct more than 10,000 senior-level searches for clients worldwide each year . From our nearly 80 offices in 40 countries, we ensure that our clients have access to the most qualified candidates for every position .

With the business community now facing many more challenges in attracting, developing and retaining talent, Korn/Ferry’s services also include a full suite of leadership and talent consulting offerings, as well as talent acquisition solutions .

Korn/Ferry International’s Global Board & CEO Services team has embraced this change driving the appointments of hundreds of new directors while utilising our Chief Executive Institute .

Developing world-class organisations is an ongoing process, and crucial to maintaining an organisation’s competitive advantage . Korn/Ferry’s Leadership and Talent Consulting business goes beyond executive search by delivering sophisticated talent and organisational strategies to optimise performance including succession planning .

Level 20, 60 Castlereagh Street Level 43, 120 Collins Street Sydney NSW 2000 Melbourne VIC 3000 Australia Australia Telephone +612 9006 3400 Telephone +613 9631 0300 Facsimile +612 9006 3600 Facsimile +613 9650 9161

Level 5, 1 Woodward Street Level 2, 14 Viaduct Harbour Ave Wellington Auckland New Zealand New Zealand Telephone +644 460 4900 Telephone +649 309 4900 Facsimile +644 460 4901 Facsimile +649 309 4904

For more information, call Robert Webster, Senior Client Partner and Head of the Australasian Board Services Practice, on +612 9006 3444 or Suzanne Williams, Senior Client Partner, Australasian Board Services Practice, on +612 9006 3428 or visit www .kornferry .com .

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About Egan Associates

Egan Associates provides advice in Australia and New Zealand to boards and chief executives of leading organisations, to mid market and entrepreneurial enterprises across all sectors and to government .

John Egan has provided advice to some of the largest organisations in the region since 1975 . John Egan and the firm’s principals have well developed long term affiliations with leaders within both the public and private sectors .

Egan Associates maintains a comprehensive Director and Senior Executive remuneration database for Australia and New Zealand and draws on international resources where necessary . Our clients extend across the complete breadth of the market from leading public companies, those preparing for listing, private and international corporations, government and related corporatised entities, as well as innovative enterprises .

Egan Associates acts as an independent adviser to boards and additionally provides advisory services to an extensive range of companies on Non Executive Directors’ emoluments, CEO and Executive reward, including both annual and long term incentive programs . Increasingly, Egan Associates is engaged in the provision of advice on strategic and corporate governance issues, preparation of explanatory notes for annual general meetings and company remuneration reports for shareholder review, as well as attesting to the reasonableness of CEO and Executive Director reward arrangements .

Details of our services can be reviewed on the company’s website .

Level 16, 6 O’Connell Street GPO Box 4130 Sydney NSW 2000 Sydney NSW 2001 Australia Australia Telephone: +612 9225 3225 Facsimile: +612 9225 3235

For more information, visit Egan Associates’ website www .eganassociates .com .au or call John Egan or Lianne Hooper on +612 9225 3225 .

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Preface

This year we have focused on the continuing challenge for boards of CEO succession planning and we outline the leading role Korn/Ferry International has taken globally in providing our clients with the expertise to assess and develop their internal talent .

The enhanced role and responsibility of board remuneration committees under new ASX listing rules is a major topic of discussion, particularly as some boards have come under real pressure to substantiate and justify their Remuneration Reports at annual meetings .

The size of boards, the selection of NEDs, and the role played by the board nomination committee, particularly in relation to gender diversity, is also discussed .

Korn/Ferry International and Egan Associates are pleased to collaborate on these important issues and to bring our collective expertise together for the benefit of our clients .

Our 2010 Board of Directors Study has been published following another year of progress and changes in our boardrooms .

We trust that you and your board will find it stimulating and helpful in your deliberations on these important issues .

Gary Reidy John Egan Managing Director, Australasia Chairman Korn/Ferry International Egan Associates

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Introduction

CEO and leadership succession continues to be a hot topic around the boardrooms of corporate Australia according to a survey conducted by Korn/Ferry International where almost 80 percent of respondents felt that succession was a leading concern for their organisations . The nature of this concern was expressed in various terms:

> inability to keep successors engaged and in the pipeline > inability to accurately anticipate (or manage) the timing of succession > specific skills shortage in senior leaders, notably a lack of deep and broad operational experience > an acknowledgement that the CEO role is getting harder and that preparing people for the unique demands of this role is increasingly challenging

Yet despite the gravity of these concerns and their impact on the sustainability of business performance, almost one third of respondents believed that the level of board oversight of the succession process was “somewhat poor” .

The reality in many organisations is that succession is still treated as an event and not a process . While one respondent insightfully noted that “It’s the hardest game of chess you will ever play”, it appears that too many boards fail to appreciate that succession is not merely a transaction, rather it is a systemic organisational change that is deeply rooted in strategy, vision and culture and necessarily impacts every talent management process within the business . The consequence for organisations that are more reactionary in their response to succession and unplanned vacancy issues is that they are likely to be limited in choice for top executive talent and as a result place long term shareholder value at risk .

There are, of course, many examples of sound succession practices . So what are we observing in the organisations that are getting succession right?

A succession mindset is inculcated and linked to strategy. Those organisations that are able to identify the key leadership capabilities that they need in order to achieve their organisational strategy and orientate their leadership development investment around these capabilities are better placed to achieve stronger talent pipelines . Too often we see the opposite, where organisations continue to invest heavily in leadership development initiatives that are not anchored in the strategic imperatives of the business and are therefore not critical to future success .

Good succession planning is a key component of risk management. Boards who appreciate the direct correlation between external stakeholder and investor confidence and the perceived depth of succession elevate the importance of systemic succession management .

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Succession management is data driven. There is an art and science to good succession planning . The robust assessment of executive talent including the objective evaluation of both performance and potential injects a necessary degree of rigour in what is too often an arbitrary process reliant upon subjective judgments founded in observation of past performance .

Identify the critical career experiences that develop leadership competency. Preparation for mission critical roles requires exposure to foundational career experiences . Organisations that identify and prioritise key assignments and roles for future leaders maximise stretch opportunities and the ability to build strategically relevant leadership competency .

Identify true high potential early. Research proves that almost 30 percent of “high performers” are not in fact “high potential” . Strong future leaders are highly “learning agile” and by identifying and measuring those factors that are linked with success in new and challenging situations, organisations are able to identify high potential talent with confidence . Data from our recent survey revealed that almost one quarter of respondent organisations did not have a systematic way of identifying high potential executives .

Develop leaders from the “inside out”. Cutting edge leadership development goes beyond technical and managerial content to focus on the personal, interpersonal and organisational context . These attributes are typically in short supply because they are not easy to acquire and take time to refine . Development initiatives deal with the whole person and must be high touch, high impact and custom designed to address:

> leading self and the demonstration of personal flexibility > leading others – getting work done through others and command skills > leading the organisation – inspiring others, driving change and enabling innovation .

Korn/Ferry International’s Leadership and Talent Consulting practice is dedicated to working with Boards on a range of succession management issues, including the alignment of succession planning processes to organisational strategy, early identification of high potential, the objective assessment of individuals utilising research validated and externally benchmarked instruments and the custom design of high impact leadership development programs .

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Editorial comment

Challenges of boards and board remuneration committeesWith the impact of the global financial crisis still being felt, many companies did not adjust board fees in 2009 even where they had capacity within pre approved fee pools . In 2010 however many boards have found it prudent to make fee adjustments either because they held back in 2009 or because they believed a modest increase would be more palatable now than a larger catch up increase in the future . On average the increase in Chairman fees over 2010 has been around 1 .8 percent and for Non Executive Director fees, 3 .9 percent .

During the last 12 months Directors have received various signals which highlight the increased stringency in governance and corporate regulation of remuneration in particular arising from the G20 responses to the global financial crisis . In Australia and New Zealand, those signals have been reinforced by particular initiatives taken by the ASX and NZSX in response to global regulatory and legislative changes; changes to Listing Rules relating to trading windows and the independence of remuneration committees being two examples in the Australian market .

While boards are dealing with the financial crisis and its impact on bottom lines and shareholder value, a real hot spot in the committee room has become the role of Chairman of the remuneration committee . The role and independence of this committee continues to grow with increased scrutiny and shareholder input . Whilst neither Australia nor New Zealand has had to appoint a pay czar (as in the US) and their financial institutions have demonstrated considerable strength by global standards (and therefore avoided much of the impact of additional regulatory control), the level of examination of remuneration issues has taken on a forensic character as distinct from an historical light touch .

While boards might not be meeting more often, except in circumstances where they have had to address capital restructuring or debt refinancing, we have observed that the frequency of meetings and/or time commitment of many committees have increased . This is particularly the case for risk management and remuneration committees . The latter is in response to both government initiated enquiries and increasingly negative votes in respect of company remuneration reports, often sponsored by proxy advisors .

With new ASX listing rules coming into force from July 2011, requiring all Top 300 Listed Entities in Australia to have a remuneration committee comprised solely of Non Executive Directors, we will see even more attention being given to the makeup of remuneration committees and to their decisions .

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Changes in the structure of boardsThere is also much discussion about the need to separate the nomination and remuneration committees of a board with more focused attention being given to board renewal . Nomination committees are increasingly addressing the key issues of board effectiveness, such as the suitability of current board members, the issues of board diversity (the gender factor) and the breadth of skills required of Directors as more Australian and New Zealand companies expand their businesses offshore .

While there has been an observable trend over the last 12 months for smaller companies to increase the proportion of Non Executive Directors, there have been significant shifts in the composition of boards in two sectors which were lagging behind others in terms of board size and the proportion of Non Executive Directors . The IT sector which previously had the lowest proportion of Non Executive Directors, 62 .5 percent in 2009, increased its proportion of Non Executive Directors to 72 percent in 2010, while companies in the telecommunications sector also increased their proportion of Non Executive Directors in one year from 73 .3 percent to 80 percent .

The other trend we have observed is a move away from large boards to a more manageable size of between six and nine Directors . 48 percent of ASX Top 50 Companies now have between eight and nine Directors, up from 36 percent in 2009 .

The ASX has also placed an additional requirement on boards to address the issue of diversity of board structures by virtue of their Corporate Governance Principles and Recommendations . The Recommendations require boards to establish a policy concerning gender diversity and to disclose that policy by 2011 . The policy should include the requirement for the board to establish measurable objectives for achieving gender diversity and for the board to annually assess both the actual objectives and progress towards achieving them . Boards will be required to disclose the proportion of women employees in the organisation, the proportion of women in senior executive roles and the number of women on boards .

The 2010 data shows the continued domination of males in both Chairman and Non Executive Director roles and whilst the recent Australian hurdle of ten percent of Non Executive Director roles being held by women was heralded as significant, it really only highlights the distance to go in achieving the gender representation being proposed in both Australia and New Zealand .

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Information and interpretation

This 2010 Study has been compiled by Egan Associates from an analysis of published information from annual reports (through to end of 2009) of leading companies in Australia and New Zealand .

Information and interpretationThe number of Australian companies included in this Study is 300 while the number of New Zealand companies is 50 .

For this 2010 Study the revenue ranges and market capitalisation ranges for Australian and New Zealand companies continue to reflect those adopted in prior years, though the constituents in these groups of companies will vary in accordance with individual corporate circumstances, as will the constituents in ranked companies .

Revenue and market capitalisation ranges (Australia and New Zealand)

2010

Greater than $10 billion $5 - $10 billion $2 - $5 billion $500 million - $2 billion $200 - $500 million Less than $200 million

Revenue and market capitalisation ranks (Australia)

2010

Of the Top 300 companies:Top 50Second 50Top 100Top 100 - 200Top 200 - 300

Revenue and market capitalisation ranks (New Zealand)

2010

Of the Top 50 companies:Top 10Top 10 - 25Top 25 - 50

The fees analysis includes base or retainer fees, committee fees and disclosed contributions to Directors’ retirement, including mandatory contributions under the Australian Superannuation Guarantee legislation . In the aggregate fees we also incorporate voluntary or mandatory setting aside of fees for the purpose of acquiring shares in a company, though exclude disclosed retirement benefit accruals .

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While data is based on that reported in respect of financial years ending 31 December 2009, the market capitalisation ranking adopted in this Study has been determined as at 30 June 2010 with a 22-day smoothing applied .

Profile of participating organisationsThe list of 350 organisations, Top 300 Australian companies and Top 50 New Zealand companies from which data has been drawn, is appended . The analysis is restricted to the Top 300 Australian and Top 50 New Zealand companies by market capitalisation as at 30 June 2010 with 22-day smoothing applied, and excludes property trusts, funds, overseas-based companies and subsidiaries .

Table 1

Profile of Australia leading companies

Australian leading 2010 average Count 2009 average %

companies A$ # A$ Change

Market capitalisation*: 3,804,214,238 300 3,235,890,596 18%Top 300 Companies

Market capitalisation: 18,140,891,600 50 15,660,862,540 16%Top 50 Companies

Operating revenue: 2,724,442,600 300 2,722,993,747 0%Top 300 Companies

Operating revenue: 12,235,485,250 50 11,975,151,220 2%Top 50 Companies

Total assets: 12,505,043,923 300 11,708,010,535 7%Top 300 Companies


Operating profit: 271,330,197 300 309,995,501 -12%Top 300 Companies

Operating profit: 1,460,708,826 50 1,594,268,192 -8%Top 50 Companies

* Market capitalisation as at 30 June 2010 and 30 June 2009 respectively

Table 2

Profile of New Zealand leading companies

New Zealand leading 2010 Average Count 2009 Average %

companies NZ$ # NZ$ Change

Market capitalisation*: 792,170,250 50 769,965,659 3%Top 50 Companies

Operating revenue: 843,516,920 50 830,627,040 2%Top 50 Companies


Operating profit: 31,862,775 50 90,999,060 -65%Top 50 Companies

* Market capitalisation as at 30 June 2010 and 30 June 2009 respectively

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Australia: Non Executive Chairmen and Non Executive Directors’ fees

Australian leading companies ranked by revenue Non Executive Chairmen’s fees have been analysed according to company size, that is by revenue and market capitalisation .

Of the Top 300 Australian companies, we have been able to include 221 Non Executive Chairmen (we exclude overseas-based incumbents, executive Chairmen and those incumbents who only served a part year) .

Table 3 reveals that the average fee payable to a Chairman in the Top 300 Australian companies stood at $241,687, at the median $174,000 and at the 75th percentile $326,000 .

Non Executive Directors’ fees among the same organisations on average stood at $124,985, at the median $102,500 and at the 75th percentile $158,642 .

The average fee payable to a Non Executive Chairman varied according to organisation scale . Among those companies with revenues of less than $200 million the Chairman’s fee on average stood at $119,892, whereas among companies with revenues greater than $10 billion the average fee was $666,663 . The median Chairman fees among the smallest companies stood at $107,506, whereas among the largest in revenue terms stood at $611,738 . At the 75th percentile the variance was from $150,000 to $742,000 .

In grouping companies within revenue clusters, taking the Top 50, Second 50, Top 100, then those companies ranked in revenue terms between the Top 100 and 200 and the Top 200 and 300 reveals similar dispersion in relation to fees payable to Chairmen and Non Executive Directors . The highest paid Non Executive Directors, including Chairmen, are in companies with the most substantial revenues and the least well paid being in those organisations ranked below the ASX Top 200 .

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Table 3

Non Executive Chairmen and Non Executive Directors’ fees in Australian leading companies by revenue

75th 25th

Top 300 Companies by revenue Average Median percentile percentile Sample

A$ A$ A$ A$ #

Total sample

Chairman 241,687 174,000 326,000 117,500 221

Non Executive Director 124,985 102,500 158,642 72,540 1,017

Revenue ranges greater than $10 billion

Chairman 666,663 611,738 742,000 583,762 15

Non Executive Director 267,177 275,930 312,374 232,937 87

Revenue ranges $5 - $10 billion

Chairman 452,293 435,000 508,000 400,000 13


Revenue ranges $2 - $5 billion

Chairman 332,327 348,038 395,757 265,934 30


Revenue ranges $500 million - $2 billion

Chairman 246,170 217,066 304,500 164,500 51


Revenue ranges $200 million - $500 million

Chairman 163,799 152,920 191,676 137,950 36


Revenue ranges Less than $200 million

Chairman 119,892 107,506 150,000 75,975 76


Revenue ranked Top 50 Companies

Chairman 482,468 447,445 601,000 346,075 45


Revenue Ranked Second Top 50 Companies

Chairman 274,168 257,904 361,736 181,688 38



Chairman 387,101 360,690 472,087 247,359 83


Revenue ranked Top 100 - 200 Companies

Chairman 192,554 162,913 217,050 140,218 70


Revenue Ranked Top 200 - 300 Companies

Chairman 114,773 104,271 143,097 74,000 68


NB: Non Executive Director exclude Chairmen

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Australian leading companies by market capitalisationAustralia’s largest companies by market capitalisation (Table 4) reveal an average Chairman’s fee of $633,163, at the median $611,738 and at the 75th percentile $713,899 . For those companies with a market capitalisation between $200 and $500 million the average Chairman’s fee stood at $127,396, at the median $115,723 and at the 75th percentile $153,060 . Among the Top 50 the average chairman’s fee stood at $519,306, at the median $478,158 and at the 75th percentile $611,738 . Among the Top 200 to Top 300 companies the average chairman’s fee stood at $132,619, at the median $119,950 and at the 75th percentile $153,989 .

For Non Executive Directors the average fee for a Director serving on a company with a market capitalisation in excess of $10 billion stood at $267,177, at the median $261,506 and at the 75th percentile $302,010 . For those Directors serving on boards of companies with a market capitalisation between $200 and $500 million the average fee was $77,251, at the median $71,346 and at the 75th percentile $91,388 .

In the most populous group, that is those with a market capitalisation between $500 million and $2 billion, the average Director’s fee stood at $100,660, at the median $96,578 and at the 75th percentile $120,000 .

Among the Top 50 the average Director’s fee stood at $226,955, at the median $212,887 and at the 75th percentile $271,420 . Among the Top 200 and Top 300 companies the average Director’s fee was $78,421, at the median $73,981 and at the 75th percentile $93,075 .

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Table 4

Non Executive Chairmen and Non Executive Directors’ fees in Australian leading companies by market capitalisation

75th 25th

Top 300 Companies Average Median percentile percentile Sample

by market capitalisation A$ A$ A$ A$ #

Total sample

Chairman 241,687 174,000 326,000 117,500 221

Non Executive Director 124,985 102,500 158,642 72,540 1,017

Market capitalisation ranges greater than $10 billion

Chairman 633,163 611,738 713,899 480,742 17


Market capitalisation ranges $5 - $10 billion

Chairman 491,678 480,700 583,762 409,062 11


Market capitalisation ranges $2 - $5 billion

Chairman 316,642 343,463 414,637 191,500 40


Market capitalisation ranges $500 million - $2 billion

Chairman 197,030 190,000 235,000 147,437 73


Market capitalisation ranges $200 - $500 million

Chairman 127,396 115,723 153,060 84,530 80


Market capitalisation ranked Top 50 Companies

Chairman 519,306 478,158 611,738 420,000 41


Market capitalisation ranked second Top 50 Companies

Chairman 265,524 262,418 347,519 172,256 38



Chairman 397,234 369,008 480,721 248,288 79


Market capitalisation ranked Top 100 -200 Companies

Chairman 175,854 162,913 219,338 109,250 74


Market capitalisation ranked Top 200 -300 Companies

Chairman 132,619 119,950 153,989 86,872 68


NB: Non Executive Directors exclude Chairmen

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Australia: Board demographics

Board composition - Executive v Non Executive DirectorsThe 2010 Study demonstrates the continued prevalence of Non Executive Directors serving on the boards of Australia’s leading companies .

Chart 1 shows that the composition of the board for the Total Top 300 Sample is 77 percent Non Executive Directors and 23 percent Executive Directors and the Top 50 sample shows that the boards comprise 82 percent Non Executive Directors and 18 percent Executive Directors .

Chart 2 shows that the proportion of Non Executive Directors is 84 percent for companies with revenue greater than $10 billion and 71 percent for companies with revenue less than $200 million . In general terms, larger companies are more likely to have a greater proportion of Non Executive Directors on their boards .

When analysed by GICS Sector (Chart 3), Utilities companies have the highest proportion of Non Executive Directors (89 percent) whereas Information Technology has the lowest proportion of Non Executive Directors serving on their boards (72 percent) .

Chart 1

Proportion of Directors for Top 300 and Top 50

The ability to become a strategic partner to the CEO and develop in-depth knowledge of the business is not simply desireable but mandatory for success as a CFO.

23%

77%

0

10

20

30

40

50

0

20

40

60

80

100Non-executive directorsExecutive directors

ASX top 50ASX top 300

0%

100%

Non Executive Directors

Executive Directors

Top 50Top 300

18%

82%

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Chart 2

Proportion of directors by revenue


Non executive directorc

Executive directors

<$200m

$200-$500 m

$500 m-$2 bn

$2-$5 bn

$5-$10 bn

>$10 bn

16%

18%

21%

19%

21%

29% 71%

79%

81%

79%

82%

84%

0% 100%


Executive Directors

<$200m

$200-$500 m

$500 m-$2 bn

$2-$5 bn

$5-$10 bn

>$10 bn

Chart 3

Proportion of directors by GICS sector


23%

19%

27%

18%

23%

23%

26%

28%

20%

11%

77%

81%

73%

82%

77%

77%

72%

74%

80%

89%

0% 100%


Executive Directors

Utilities

Telecoms

Materials

Info tech

Industrials

Health care

Financials

Energy

Consumer staple

Consumerdiscretionary

Non executive directors

Executive directors

Utilities

Telecoms

Materials

Info tech

Industrials

Health care

Financials

Energy

Consumer staple

Consumer discretionary

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Distribution of board size – all Directors (Executive and Non Executive)Board size is analysed according to Revenue and then by GICS sector, adopting the following seven categories:

> less than four Directors;> four to five;> six to seven;> eight to nine;> ten to 11;> 12 to 13;> greater than 13 .

Table 5 shows the number of Directors serving on the boards of the Top 300 companies and those for the Top 50 companies ranked by Revenue . Further analysis is provided on companies by industry sector .

Most (89 percent) of the Total Sample have between four and nine Directors and eight percent have boards with ten or more Directors . Only three percent of the total sample have fewer than four Directors, all of which are on boards of companies with less than $500 million in annual revenue .

Among the Top 50 ASX listed companies only one board has less than six Directors and 88 percent have between six and 11 Directors, with ten percent having more than 11 Directors .

Indicatively, if revenue is a guide to company scale, larger companies have greater numbers of Directors than do smaller companies . As the data indicates, 84 percent of companies with revenues of less than $200 million have seven or fewer Directors, 78 percent of companies with revenues between $200 million and $500 million have seven or fewer Directors, whereas no board of companies over $10 billion has less than seven Directors . All but four companies over $5 billion have at least eight Directors .

The industry sector data contains companies of varying size within each GICS category . Variations in the data are partly impacted by sample size . 84 percent of Consumer Staple boards have between six and nine Directors, but only 48 percent of Energy boards have between six and nine Directors . Information Technology boards are increasing in size, 54 percent have between six and nine Directors, with 45 percent still having four to five Directors .

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Table 5

Distribution of board size—all Directors (including Chairman, Executive and Non Executive)

< 4 4 - 5 6 - 7 8 - 9 10 - 11 12 - 13 > 13

Directors Directors Directors Directors Directors Directors Directors Sample

# % # % # % # % # % # % # % #

Top 300 Companies 9 3% 80 27% 122 41% 64 21% 19 6% 3 1% 3 1% 300

Top 50 Companies 0 0% 1 2% 8 16% 24 48% 12 24% 2 4% 3 6% 50

Revenue ranges

Greater than $10 billion 0 0% 0 0% 0 0% 7 37% 8 42% 1 5% 3 16% 19

$5 - $10 billion 0 0% 1 8% 3 23% 5 38% 4 31% 0 0% 0 0% 13

$2 - $5 billion 0 0% 1 3% 12 34% 16 46% 5 14% 1 3% 0 0% 35

$500 million - $2 billion 0 0% 7 10% 40 60% 19 28% 1 2% 0 0% 0 0% 67

$200 - $500 million 1 2% 15 28% 26 48% 10 18% 1 2% 1 2% 0 0% 54

Less than $200 million 8 7% 56 50% 41 37% 7 6% 0 0% 0 0% 0 0% 112

GICS sector

Consumer discretionary 0 0% 10 24% 17 41% 10 24% 3 7% 1 2% 0 0% 41

Consumer staple 0 0% 1 8% 5 42% 5 42% 1 8% 0 0% 0 0% 12

Energy 2 7% 12 41% 9 31% 5 17% 1 3% 0 0% 0 0% 29

Financials 3 6% 7 13% 18 33% 16 30% 8 15% 2 4% 0 0% 54

Health Care 0 0% 5 28% 11 61% 2 11% 0 0% 0 0% 0 0% 18

Industrials 1 2% 8 16% 26 52% 13 26% 1 2% 0 0% 1 2% 50

Information technology 0 0% 5 45% 4 36% 2 18% 0 0% 0 0% 0 0% 11

Materials 3 4% 30 42% 27 38% 6 8% 4 6% 0 0% 2 3% 72

Telecommunication services 0 0% 1 20% 2 40% 1 20% 1 20% 0 0% 0 0% 5

Utilities 0 0% 1 13% 3 38% 4 50% 0 0% 0 0% 0 0% 8

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Board composition by gender – Non Executive DirectorsCharts 4 and 5 highlight the fact that males hold the overwhelming majority of non executive director positions on leading company boards . The data also reveals that 97 .7 percent of non executive chairmen across our entire sample are males . This is also reflected in the Top 50 companies . For director roles, within our total sample females occupied 9 .6 percent of board positions, though among the Top 50 companies, 16 .3 percent of non executive directors were female .

Chart 4

Board composition by gender for Top 300


9.6%

90.4%

0

20

40

60

80

100Male

Female

Non executive chairmanNon executive directors

0%

100%Male

Female

Non Executive ChairmenNon Executive Directors

97.7%

2.3%

Chart 5



0

20

40

60

80

100Male

Female


0%

100%Male

Female


16.3%

83.7%

95.8%

4.2%

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Board comparison by age – Non Executive Directors and ChairmenIt should be noted that not all Directors in the sample disclosed their age .

Where Directors ages were disclosed the average age stood at 60 years and at the median 61 years (Table 6) .

Among those companies with revenues greater than $10 billion, the average age of Non Executive Directors is 61 years and the median age is 62 years . Those companies with revenues less than $500 million have an average Non Executive Director age of 58 years and a median of 59 years .

Table 6

Age of Chairmen and Non Executive Directors in Australian Top 300 Companies

75th 25th Sample

Top 300 Companies Average Median percentile percentile #

Total sample 60 61 65 55 1,285

Revenue ranges

Greater than $10 billion 61 62 65 56 159

$5 - $10 billion 62 63 66 58 87

$2 - $5 billion 60 61 65 57 194

$500 million - $2 billion 61 61 66 56 303

$200 - $500 million 58 59 64 54 217

Less than $200 million 58 59 65 53 325

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Australia: Board committees

Committees have been grouped according to similarity of function . Our analysis shows that companies use a variety of titles for committees as noted in Table 7 .

“Other” includes Review; Conduct; Industry Specific; Marketing; Management; Planning; Strategy; Special Board Meetings; Merger/Acquisition; Resources and Restructure committees, as well as infrequently occurring committees such as Donations and Conduct . For the Total Sample 27 percent have an “Other” committee and for the Top 50, 64 percent .

Distribution of committee typesTable 7 shows that 97 percent of the Top 300 and 100 percent of the Top 50 have an Audit Committee, and 89 percent of the Top 300 and 100 percent of the Top 50 have a Remuneration Committee . With regard to Nomination committees, 30 percent of the Top 300 and 64 percent of the Top 50 have this committee .

Table 7

Distribution of core committees in Australian leading companies

Committee Top 300 Top 300 Top 50 Top 50

# % # %

Audit 1 290 97% 50 100%

Compliance 2 11 4% 5 10%

Corporate governance 15 5% 4 8%

Nominations 3 89 30% 32 64%

Occupational health & safety 4 45 15% 13 26%

Other 5 82 27% 32 64%

Remuneration 6 268 89% 50 100%

Risk 7 57 19% 21 42%

1 Includes: stand alone Audit Committee, Audit & Compliance Committee, Audit Compliance & Risk Committee and an Audit & Risk Committee.

2 Stand alone Compliance Committee.

3 Stand alone Nomination Committee.

4 Includes: stand alone OH/S Committee, OH/S & Environment Committee and a standalone Environment Committee.

5 All other committee types.

6 Includes: stand alone Remuneration Committee, Remuneration & Nominations Committee and Remuneration & HR Committee.

7 Includes stand alone Risk Committee, Finance Committee and Risk & Investment Committee.

22

New Zealand: Non Executive Chairmen and Non Executive Directors’ fees

New Zealand leading companies ranked by revenue The analysis of New Zealand companies has been compiled in New Zealand dollars .

Table 8 sets out the fees paid to Non Executive Chairmen among leading New Zealand companies . It will be noted that the average fee stood at NZ$130,637, at the median NZ$101,000 and at the 75th percentile NZ$162,917 .

Fees paid to Non Executive Directors in New Zealand’s Top 50 companies on average stood at NZ$73,395, at the median NZ$63,000 and at the 75th percentile NZ$90,000 .

Ranking the Top 50 New Zealand companies by revenue, the average fees paid to Chairmen in the Top 10 organisations are NZ$223,713 and the median is NZ$193,634 compared with those companies ranked 25-50 where the average fee is NZ$95,567 and the median fee NZ$90,000 .

Size of company in terms of revenue also has an impact on fees for Non Executive Directors with the Top 10 ranked companies having an average of NZ$111,038 and a median of NZ$107,500 while those companies ranked Top 25-50 have average Non Executive Director fees of NZ$56,655 and median fees of NZ$52,000 .

23

Table 8

Non Executive Chairmen and Non Executive Directors’ fees in New Zealand leading companies by revenue

75th 25th

Average Median Percentile percentile Sample

Top 50 Companies by revenue NZ$ NZ$ NZ$ NZ$ #

Total sample

Chairman 130,637 101,000 162,917 80,000 47


Revenue ranges greater than $2 billion

Chairman 304,767 302,500 381,000 226,267 4


Revenue ranges $500 million - $2 billion

Chairman 149,422 154,013 185,000 103,250 12


Revenue ranges $200 million - $500 million

Chairman 112,994 105,500 129,885 86,250 14


Revenue ranges less than $200 million

Chairman 90,936 80,000 100,000 74,000 17



Chairman 223,713 193,634 238,375 160,208 10



Chairman 121,940 126,000 137,500 85,000 13



Chairman 96,567 90,000 103,250 74,750 24


New Zealand leading companies by market capitalisationAs in Australia, Directors’ fees were highest among larger companies when ranked by market capitalisation . Table 9 shows the fees paid to Non Executive Directors in New Zealand’s leading organisations .

Chairmen in the Top 10 New Zealand companies were paid average fees of NZ$219,068 and median fees of NZ$185,426 . The average Chairman’s fee in companies ranked 25-50 by market capitalisation is NZ$88,501 and the median fee NZ$80,000 . Fees for Non Executive Directors with the top 10 ranked companies have an average of NZ$114,729 and a median of NZ$107,00 while those companies ranked 25-50 have average Non Executive Director fees of NZ$53,192 and median fees of NZ$50,000 .

24

Table 9:

Non Executive Chairmen and Non Executive Directors’ fees in New Zealand leading companies by market capitalisation

75th 25th

Top 50 Companies Average Median percentile percentile Sample

by market capitalisation NZ$ NZ$ NZ$ NZ$ #

Total sample

Chairman 130,637 101,000 162,917 80,000 47



Chairman 219,068 185,426 231,500 176,589 10


Market capitalisation ranked Top 10 - 25 Companies

Chairman 136,696 134,340 156,125 100,000 14


Market capitalisation ranked Top 25 - 50 Companies

Chairman 88,501 80,000 100,500 74,500 23


NB Non Executive Director excludes Chairmen

New Zealand: Board demographics

Board composition by gender – Non Executive DirectorsChart 6 shows that, as in Australia, males hold the overwhelming majority of Non Executive Director positions in the Top 50 New Zealand companies . 95 .8 percent of Non Executive Chairmen are males while, females occupied only 11 .7 percent of Non Executive board positions .

Chart 6



0

20

40

60

80

100Male

Female


0%

100%Male

Female


4.2%11.7%

88.3%95.8%

25

Board comparison by age – Non Executive Directors and ChairmenIt should be noted that not all Directors in the sample disclose their age .

For all Non Executive Directors and Chairmen across the Sample, the average age is 60 years (Table 10) .

Table 10

Age of Chairmen and Non Executive Directors in New Zealand Top 50 Companies

75th 25th Sample

Top 50 Companies by Revenue Average Median Percentile Percentile #

Total Sample 60 61 67 55 85

Revenue Ranges

Greater than $2 billion 61 61 64 59 15

$500 million - $2 billion 60 59 67 56 33

$200 - $500 million 60 61 65 54 22

Less than $200 million 60 63 69 56 15

New Zealand: Board committees

Distribution of committee typesTable 11 shows that all the Top 50 companies in New Zealand have an Audit Committee, and 90 percent have a Remuneration Committee .

Table 11

Distribution of core committees in New Zealand Top 50 Companies

Top 50 Top 50

Committee # %

Audit 1 50 100%

Compliance 2 1 2%

Corporate governance 3 6%

Nominations 3 21 42%

Occupational health & safety 4 4 8%

Other 5 10 20%

Remuneration 6 45 90%

Risk 7 9 18%

1 Includes: stand alone Audit Committee, Audit & Compliance Committee, Audit Compliance & Risk Committee and an Audit & Risk Committee.

2 Stand alone Compliance Committee.

3 Stand alone Nomination Committee.

4 Includes: stand alone OH/S Committee, OH/S & Environment Committee and a standalone Environment Committee.

5 All other committee types.

6 Includes: stand alone Remuneration Committee, Remuneration & Nominations Committee and Remuneration & HR Committee.

7 Includes: stand alone Risk Committee, Finance Committee and Risk & Investment Committee.

26

Abacus Property Group

Acrux Limited

Adelaide Brighton Limited

Aditya Birla Minerals Limited

AGL Energy Limited

ALE Property Group

Alesco Corporation Limited

Allied Gold Limited

Alumina Limited

Amalgamated Holdings Limited

Amcom Telecommunications Limited

Amcor Limited

AMP Limited

Ampella Mining Limited

Ansell Limited

AP Eagers Limited

APA Group

APN News & Media Limited

Aquila Resources Limited

ARB Corporation Limited

Argo Investments Limited

Aristocrat Leisure Limited

Arrow Energy Limited

Asciano Group

Aspen Group Limited

ASX Limited

Atlas Iron Limited

Ausdrill Limited

Ausenco Limited

Austal Limited

Austar United Communications Limited

Austbrokers Holdings Limited

Austereo Group Limited

Austin Engineering Limited

Australand Property Group

Australia and New Zealand Banking Group Limited

Australian Agricultural Company Limited

Australian Foundation Investment Company Limited

Australian Pharmaceutical Industries Limited

Australian United Investment Company Limited

Automotive Holdings Group Limited

Avoca Resources Limited

AWB Limited

AWE Limited

AXA Asia Pacific Holdings Limited

Bank of Queensland Limited

Beach Energy Limited

Bell Financial Group Limited

Bendigo and Adelaide Bank Limited

BHP Billiton Limited

Billabong International Limited

BKI Investment Company Limited

Blackmores Limited

BlueScope Steel Limited

Boart Longyear Limited

Boral Limited

Bow Energy Limited

Bradken Limited

Brambles Limited

Breville Group Limited

Brickworks Limited

Brockman Resources Limited

BT Investment Management Limited

Cabcharge Australia Limited

Caltex Australia Limited

Campbell Brothers Limited

Cape Lambert Resources Limited

Carbon Energy Limited

Cardno Limited

Carlton Investments Limited

Carnarvon Petroleum Limited

Carsales.com Limited

Cash Converters International Limited

Catalpa Resources Limited

CBH Resources Limited

Cellestis Limited

Centennial Coal Company Limited

CGA Mining Limited

Challenger Financial Services Group Limited

Charter Hall Group

Choiseul Investments Limited

Citadel Resource Group Limited

Clearview Wealth Limited

Clough Limited

Coalspur Mines Limited

Coca-Cola Amatil Limited

Cochlear Limited

Cockatoo Coal Limited

Codan Limited

Commonwealth Bank of Australia

Computershare Limited

ConnectEast Group

Consolidated Media Holdings Limited

Corporate Express Australia Limited

Count Financial Limited

Country Road Limited

Crane Group Limited

Cromwell Group

Crown Limited

CSG Limited

CSL Limited

CSR Limited

CuDeco Limited

Customers Limited

David Jones Limited

Dexus Property Group

Discovery Metals Limited

Diversified United Investment Limited

Dominion Mining Limited

Dominos Pizza Enterprises Limited

Downer EDI Limited

Eastern Star Gas Limited

Elders Limited

Emeco Holdings Limited

Energy Developments Limited

Energy Resources of Australia Limited

Envestra Limited

Extract Resources Ltd

Fairfax Media Limited

Fantastic Holdings Limited

FKP Property Group

Fleetwood Corporation Limited

FlexiGroup Limited

Flight Centre Limited

Forge Group Limited

Fortescue Metals Group Limited

Foster’s Group Limited

Gindalbie Metals Limited

Giralia Resources NL

List of organisations surveyed – Australia

27

Global Mining Investments Limited

Gloucester Coal Limited

Goodman Fielder Limited

Goodman Group

GPT Group

GrainCorp Limited

Grange Resources Limited

GUD Holdings Limited

Gunns Limited

GWA International Limited

Harvey Norman Holdings Limited

Hastie Group Limited

Healthscope Limited

Hills Industries Limited

Horizon Oil Limited

Hutchison Telecommunications (Australia) Limited

iiNet Limited

Iluka Resources Limited

Incitec Pivot Limited

Independence Group NL

Industrea Limited

Infigen Energy Limited

Insurance Australia Group Limited

Intrepid Mines Limited

InvoCare Limited

IOOF Holdings Limited

IRESS Market Technology Limited

Iron Ore Holdings Limited

iSOFT Group Limited

JB Hi-Fi Limited

Kagara Limited

Karoon Gas Australia Limited

Kingsgate Consolidated Limited

Kingsrose Mining Limited

Leighton Holdings Limited

Lend Lease Group

Linc Energy Limited

Lynas Corporation Limited

MAC Services Group Limited (The)

Macarthur Coal Limited

Macmahon Holdings Limited

Macquarie Group Limited

Mantra Resources Limited

McMillan Shakespeare Limited

Medusa Mining Limited

Mermaid Marine Australia Limited

Mesoblast Limited

Metcash Limited

Milton Corporation Limited

Minara Resources Limited

Mincor Resources NL

Mineral Deposits Limited

Mineral Resources Limited

Mirabela Nickel Limited

Mirvac Group Limited

Mitchell Communications Group Limited

Molopo Energy Limited

Moly Mines Limited

Monadelphous Group Limited

Mount Gibson Iron Limited

Murchison Metals Ltd

National Australia Bank Limited

National Hire Group Limited

Navitas Limited

New Hope Corporation Limited

Newcrest Mining Group

Nexus Energy Limited

NIB Holdings Limited

Nkwe Platinum Limited

Northern Iron Limited

NRW Holdings Limited

Nufarm Limited

OneSteel Limited

Orica Limited

Origin Energy Limited

OrotonGroup Limited

OZ Minerals Limited

Pacific Brands Limited

Paladin Energy Limited

PanAust Limited

Panoramic Resources Limited

PaperlinX Limited

Peet Limited

Perilya Limited

Perpetual Limited

Perseus Mining Limited

Pharmaxis Limited

Platinum Australia Limited

Platinum Capital Limited

Premier Investments Limited

Primary Health Care Limited

Prime Infrastructure Group

Prime Media Group Limited

Programmed Maintenance Services Limited

Qantas Airways Limited

QBE Insurance Group

Ramsay Health Care Limited

REA Group Limited

Reckon Limited

Redflex Holdings Limited

Reece Australia Limited

Regis Resources Limited

Reject Shop Limited (The)

Resolute Mining Limited

Retail Food Group Limited

Ridley Corporation Limited

Rio Tinto Limited

Riversdale Mining Limited

Roc Oil Company Limited

SAI Global Limited

Salmat Limited

Sandfire Resources NL

Santos Limited

Sedgman Limited

SEEK Limited

Servcorp Limited

Seven Group Holdings Limited

Sigma Pharmaceuticals Limited

Silex Systems Limited

Silver Lake Resources Limited

Sims Metal Management Limited

Sirtex Medical Limited

Skilled Group Limited

SMS Management & Technology Limited

Sonic Healthcare Limited

SP AusNet

Spark Infrastructure Group

Sphere Minerals Limited

Spotless Group Limited

St Barbara Limited

Stockland Corporation Limited

Straits Resources Limited

28

STW Communications Group Limited

Summit Resources Limited

Suncorp-Metway Limited

Super Cheap Auto Group Limited

TABCORP Holdings Limited

Tassal Group Limited

Tatts Group Limited

Technology One Limited

Telstra Corporation Limited

Ten Network Holdings Limited

Thakral Holdings Limited

Toll Holdings Limited

TOWER Australia Group Limited

TPG Telecom Limited

Transfield Services Limited

Transpacific Industries Group Ltd

Transurban Group Limited

Troy Resources NL

UGL Limited

Unilife Corporation

Universal Biosensors Inc

Valad Property Group

Village Roadshow Limited

Virgin Blue Holdings Limited

Washington H Soul Pattinson & Company Limited

Watpac Limited

Wesfarmers Limited

West Australian Newspapers Holdings Limited

Western Areas NL

Westfield Group

Westpac Banking Corporation

White Energy Company Limited

Whitehaven Coal Limited

WHK Group Limited

Wide Bay Australia Ltd

Woodside Petroleum Limited

Woolworths Limited

WorleyParsons Limited

Wotif.com Holdings Pty Ltd

Abano Healthcare Group Limited

AFFCO Holdings Limited

Air New Zealand Limited

Auckland International Airport Limited

Briscoe Group Limited

Cavalier Corporation Limited

Contact Energy Limited

Delegat’s Group Limited

EBOS Group Limited

Fisher & Paykel Appliances Holdings Limited

Fisher & Paykel Healthcare Corporation Limited

Fletcher Building Limited

Freightways Limited

Hallenstein Glasson Holdings Ltd

Infratil Limited

Lyttelton Port Company Limited

Mainfreight Limited

Methven Limited

Metlifecare Limited

Michael Hill International Limited

Millennium & Copthorne Hotels New Zealand Limited

New Zealand Exchange Limited

New Zealand Oil & Gas Limited

New Zealand Refining Company Limited (The)

Nuplex Industries Limited

NZ Farming Systems Uruguay Limited

Opus International Consultants Limited

PGG Wrightson Limited

Pike River Coal Limited

Port of Tauranga Limited

Property For Industry Limited

Pumpkin Patch Limited

Pyne Gould Corporation Limited

Rakon Limited

Restaurant Brands New Zealand Ltd

Rubicon Limited

Ryman Healthcare Limited

Sanford Limited

Skellerup Holdings Limited

Sky Network Television Limited

SKYCITY Entertainment Group Limited

Steel & Tube Holdings Limited

Telecom Corporation of New Zealand

TOWER Limited

TrustPower Limited

Turners & Growers Group

Vector Limited

Wakefield Health Limited

Warehouse Group Limited (The)

Xero Limited

List of organisations surveyed – New Zealand

2010 board of directors study

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