hang seng infograph - english
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An AnAlysis of independent non-executive
directors At HAng seng index compAnies
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21. Market Capitalization as of 9/30/20142. MTR Corp is 76% owned by Hong Kong Government
HK & cHinese poes (24)Total market capitalization
USD 582 Billion1
cHinese soes (22) Total market capitalization
USD 1.6 Trillion1
Global & Regional Companies – Not held by PRC government-controlled entities and deriving more than 50% of revenue outside Greater China
Chinese SOEs – Companies where PRC government-controlled entities have controlling interest and deriving more than 50% of revenue within Greater China
HK & Chinese POEs - Companies not held by PRC government-controlled entities and deriving more than 50% of revenue within Greater China
globAl & regionAl
compAnies (4)Total market capitalization
USD 326 Billion1
metHodology � Russell Reynolds Associates undertook an analysis of the Boards of Directors for all the companies that comprise Hang Seng Index.
� The study analyzed: – The structure and composition of each Board – The connectivity between Boards – The background and experience of the 232 independent non-executive directors (INEDs)
sitting on these Boards � In total, we analyzed the boards of 50 companies. Companies were grouped based on their ownership structures and market emphasis into one of three categories: Chinese State-Owned Enterprise (Chinese SOEs), HK & Chinese Privately-Owned Enterprise (HK & Chinese POEs) and Global & Regional Companies.
A snApsHot of compAnies included in our AnAlysis
2
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3
ineds And foreign directors As A sHAre of All of boArd members
AverAge number of ineds on tHe boArd
560Directors
of whom...
232 (41%) are INEDs of whom...
87 (16%) are Foreign Directors
bAsic boArd composition � There are 560 directors across Hang Seng Index companies, 41% of whom are INEDs
� Board size across all company categories varies between 7 and 22 members, with an average size between 12-13.
� Average number of INEDs on boards varies depending on company type, from less than 5 for Chinese SOEs to 6.5 for Global & Regional Companies.
Global & ReGional Companies
6.5
4.8
Chinese soes
6.0
hK & Chinese poes
AverAge boArd size
Global & ReGional Companies
12.5
12.5
Chinese soes
13.5
hK & Chinese poes
The smallest board has 7 members The fewest INEDs on the board: 3The largest board has 22 members The most INEDs on the board: 12
Min Average Max
ineds As A sHAre of All boArd members, by compAny type
Global & ReGional Companies
hK & Chinese poes
Chinese soes 38%
75%
92%
70%
29%
24%
27%
53%
45%
* Data as of 9/30/2014
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Age distribution of ineds hanG senG index s&p 1500
ined Tenure
tenure of ineds by compAny type
6% 4%
38% 32%
23%29%
32% 35%50 to 5950 to 59
Below 50 Below 5067+ 67+
60 to 6760 to 67
30%
23%
Appointed within last 4 years
Appointed in last 4 to 8 years
47%
Appointed over 8 years ago
ineds demogrApHics � Age distribution of INEDs for Hang Seng listed companies is similar to that for S&P 1500 Index companies, with roughly one third of them over 67 years old.
� 35 companies have INEDs with tenure over 8 years, across all company types.
� In terms of INED tenure, almost half of them were appointed over 8 years ago.
Note: typical INED term is four years, so INEDs with tenure of over eight years would normally be serving their third term on the board.
Tenure below 6 years Tenure between 6-8 years Tenure above 8 years
GLOBAL & REGIONAL COMPANIES
HK & CHINESE POEs CHINESE SOEs
65%
27%
8%
37%
50%
13%65%
27%
8%
* Data as of 9/30/2014
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5
ined gender diversity � 28 boards do not have women INEDs on them. For comparison, since June 2014 all FTSE100 companies have at least one woman on their boards.
� The share of women INEDs differs by company type. Women make up about 19% of all board members at Global or Regional companies, but one-tenth of boards at HK and Chinese POEs and Chinese SOEs.
� Almost 11% of the INEDs are women. This is lower than at other major exchanges. For comparison, women directors constitute 21% of all directors for the ASX 50 and 15% for the S&P 1500.
gender diversity by compAny cAtegory
gender diversity Across countrieshanG senG index – ineds
hanG senG index – all diReCtoRs
asx 50** s&p 1500**
89%
11%
90%
10%
79%
21%
85%
15%
Global & ReGional Companies hK & Chinese poes Chinese soes
Min Average Max
3%
Women ineds As A sHAre of All boArd members, by compAny cAtegory
Global & ReGional Companies
hK & Chinese poes
Chinese soes
38%
20%
13%
0%
0%
0%
11%
5%
Global or Regional Companies have women on their boards
2 4out of (50%) 12 24 (50%)
out of (36%)8 22out
of
HK & Chinese POEs have women on their boards
Chinese SOEs have women on their boards
* Data as of 9/30/2014** includes all directors
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6
96.49 mm
ContinentalEuropean
British
NorthAmerican
SoutheastAsian & Japanese
Australian& New Zealand
44%6%
25%
19%
6%
ined nAtionAlity � 39 Hang Seng Index companies have foreign INEDs on their boards, including all global or regional companies.
� Average share of foreign INEDs varies by company type, from a third in Global & Regional Companies to one in ten for Chinese SOEs.
� Most foreign INEDs come from Britain or North America.
foreign ineds by compAny cAtegory
foreign ineds As A sHAre of All boArd members, by compAny type
Global & ReGional Companies
hK & Chinese poes
Chinese soes
Min Average Max
10%
69%
46%
40%
7%
0%
0%
34%
18%
Global & ReGional Companies hK & Chinese poes Chinese soes
All Global or Regional Companies have foreign INEDs on their boards
HK & Chinese POEs have foreign INEDs on their boards
Chinese SOEs have foreign INEDs on their boards
4 4out of (100%) 20 24 (83%)
out of (68%)15 22out
of
nAtionAlity of foreign ineds
* Data as of 9/30/2014
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ined bAcKground And experience � Chinese and foreign INEDs often bring diverse background and experience to the board.
� Experience in government or with regulators is common for both Chinese and foreign INEDs, with almost a third of Chinese INEDs bringing experience of working with the Chinese government or regulators, while for foreign INEDs this experience usually has an international focus.
� Banking or investment experience is common for both Chinese and non-Chinese INEDs, with almost half of each group having worked for a bank or investment firm at some point in their career.
� A finance or accounting background is slightly more common among foreign INEDs, while legal experience is more common among Chinese INEDs.
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
finAnce or Accounting experienceChinese ineds FoReiGn ineds
14% 23%
77%86%
greAter cHinA government or regulAtor experience**
FoReiGn ineds
32%3%
97%68%
non-greAter cHinA government or regulAtor experienceChinese ineds FoReiGn ineds
1% 15%
85%99%
bAnKing or investment experienceChinese ineds FoReiGn ineds
41% 46%
54%59%
AcAdemic experienceChinese ineds FoReiGn ineds
14%6%
86% 94%
legAl experienceChinese ineds FoReiGn ineds
11% 2%
89% 98%
* Data as of 9/30/2014** Note: CPPCC membership not counted in sample
Chinese ineds
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boArd connectivity � The graph below illustrates how Hang Seng companies are connected through INEDs, NEDs and Executive Directors sitting on their boards.
� There are 32 INEDs sitting on multiple Hang Seng boards, and 36 companies share at least one INED with another Hang Seng Index company.
� Two key observations about board interconnectivity: – All but one Global & Regional Company share a director with Hong Kong & Chinese POE
Boards, but no Global & Regional Company share a director with a Chinese SOE. – There are 5 HK & Chinese POEs, 3 Chinese SOEs and 1 Global & Regional Company with no
links to any other Hang Seng Index company board.
HAng seng index compAnies – boArd connections
Global and Regional Companies
HK & Chinese POEs
Chinese SOEs
Board Interconnectivity
Key
Size of bubble indicates board size, e.g:
Color of bubble indicates type of company, i.e.:
21 8AIACheungKong
GalaxyEnter-
tainment
Bank OfChina
CiticPacific
Tingyi
KunlunEnergy
SinoLand
HangLung
Properties
HendersonLand
Develop-ment
Bank OfCommun-Ications
ChinaMengniu
Dairy
BoCHK
China LifeInsurance
ChinaMerchants
HenganInternational
Petrochina
ChinaShenhuaEnergy China
OverseasLand &Invest-ments
CoscoPacific
NewWorld
Develop-ment
Bank OfEast Asia Hong
Kong &ChinaGas
Li &Fung
SunHung KaiProperties
SwirePacific
Hong KongExchanges& Clearing
CathayPacificAirways Power
AssetsHangSengBank
AIA
HutchisonWhampoa
CheungKong
Ping AnInsurance
ChinaConstruction
Bank
ChinaUnicom
CLPWharf
BelleInternational
Tencent
SandsChina
LenovoGroup
CNOOC
Sinopec
ChinaResources
Land
MTRCorporation
ChinaResources
Power
ChinaResourcesEnterprise
ChinaMobile
ICBC
WantWant
HSBC
* Data as of 9/30/2014
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Russell Reynolds Associates is a global leader in assessment, recruitment and succession planning for chief executive officers, boards of directors and key roles within the C-suite. With 350 consultants in 44 offices around the world, we work closely with both public and private organizations across all industries and regions. We help our clients build boards and executive teams that can meet the challenges and opportunities presented by the digital, economic, environmental and political trends that are reshaping the global business environment.
www.russellreynolds.com
© Copyright 2015, Russell Reynolds Associates. All rights reserved
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