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“Society is changing in terms of making sure you’re getting the right balance between your social licence to operate and making money for shareholders,” said Paatsch.
However, he said Australians tended to be reluctant to remove underperforming directors when companies lost their way, noting only about five have been removed from office in non-takeover situations over the past 15 years.
Qantas chair Richard Goyder and former CEO Alan Joyce at the airline’s AGM in November 2022.Credit: Louie Douvis
“We’re very accepting of mediocre board performance until there is a massive crisis, and then it’s all the board’s fault. Boards don’t matter until they do,” said Paatsch. “And when they do, you really want them to be decisive and open and honest and clean up the mess.”
In Qantas’ case, it would not be enough to call for Goyder’s resignation; an alternative must be put forward, he said. “It’s never who you fire, it’s who you hire.”
In 2022, non-executive ASX 100 board directors were paid $274,936 on average, up from $267,933 in 2021. The average pay of ASX 300 chairs had the greatest increase, to $207,192 in 2022 from $190,278 in 2021.
Ownership Matters co-founder Dean Paatsch.Credit: Paul Jeffers
The number of independent directors with no “skin in the game” – that is, personal investments in shares that brings them in alignment with shareholders – remains “disappointingly” high: 50 ASX 100 directors, 72 ASX 200 directors and 86 ASX 300 directors have no skin in the game.
The longest-serving of these is Michael Harvey, son of Harvey Norman founder and chairman Gerry Harvey, who has served on the white goods retailer’s board for 29 years without owning shares.
There are no laws that impose limits on how long a director can serve. “You can sit on [a board] in perpetuity,” said Paatsch.
While the executive management teams of ASX-listed companies tended to be scrutinised through the performance and strategy of the company, the individual contributions and performances of directors was not as clear, said Paatsch. New board directors are selected through specialist external recruitment firms, or through suggestions from existing board members.
“If the chairman says, ‘Look, I’ve got this fabulous [candidate]’ ... you’ll probably find that you’d get the gig,” Paatsch said.
“The bigger picture really here is there’s still a lot of work to be done to make sure that non-executive director appointments are based on merit and competency rather than patronage, association or past appointments.”
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