Identifying a positive link between corporate governance

and board diversity

Grace BorsellinoProf Michael Adams

School of Law

20th May 2015

New Horizons in Corporate Governance, UTS, ASX, Sydney

Benefits

• Hotly contested across many academic fields, however evidence is clear:

• Claessens & Yurtoglu 2012 UN study• “Business case for diversity” Wang & Clift• Clarke & Adams ARC 2007 project• Korn Ferry Institute 2015 Asia Pacific

Diversity

• Wang & Clift in “business case for diversity” state after 20 years of corporate boards in UK, USA and Australia remain dominated by white males!

• CAMAC 2009 report notes more than gender: age, ethnicity, socio-economic, cultural background, formal qualifications

• ASX Recommendation 1.5 focus on gender, but note other factors in policy

Board Diversity

Current Hot Topics• Diversity Council Australia and Deakin

University 2015 – Cultural Origins of ASX directors

• BlackRock 2015 – Achieving Gender Diversity

• Korn Ferry Institute 2015 Asia pacific result on 10 markets

ASX 100 Directors by cultural group between 2004-2013

2015 ASX Top 100

Company Total on Board of Directors

No Female Directors

Percentage of Females

Average Age of Directors

Ethnicity Company Ranking as at 30 January 2015

CBA 11 3 27% 61.2 1 No 1$145billion

Westpac 9 4 44% 58.8 0 No 2 $108b BHP 14 3 21% 62.1 0 No 3 $94b ANZ 8 2 25% 59 1 No 4 $91b NAB 13 2 15% 60.3 2 No 5$86b Telstra 10 3 30% 60.3 1 No 6 $79b Westfarmers 12 3 25% 58.8 0 No 7 $49b CSL Ltd 8 2 25% 61.6 0 No 8 $42b Woolworths 12 3 25% 61.5 1 No 9 $40b Woodside Pet 9 2 22% 57.6 0 No 10 $28b IAG 9 3 33% 57.8 1 No 20 $15b Computershare 7 2 28% 59.2 0 No 50 $6.5b Flight Centre Travel

5 1 20% 51.8 0 No 75 $3.8b

Adelaide Brighton

6 1 17% 60.3 0 No 100 $2.3b

Asian gender data

Korn/Ferry Institute 2015: Female representation on Asia Pacific boards

Age diversity

Korn/Ferry Institute 2013: age diversity by generation(s) across nine APAC

Ethnicity

Korn/Ferry Institute 2013: identified ethnic groups on boards across nine countries

Targets or Quotas

• According to 2014 Blackrock Report The voluntary targets of countries have a very slow (‘glacial’) change however 2015 Blackrock Report suggests treading with caution.

• Evidence demonstrates that there is progress with Australia’s current voluntary measures in place

Conclusion

Credit Suisse 2014 report states: “It is not a case of a greater ability of one gender versus the other but that a more diverse group makes for better decision making and corporate performance. The speed with which change will prove to be the most important and challenging variable.”• The voluntary process is progressing and if it

continues there is no need for quotas.