A report into the directorial makeup of ASX-listed companies over the last 15 years has found that company performance rarely impacts board tenure, and that many vacancies are given to people who are already on another board.
The ‘Many are called, Few are chosen’ report by Ownership Matters found that underperforming businesses only see marginally more board resignations – with companies in the bottom rung of ASX300 performance observing one additional director retirement every three years.
And, the report found that as board members fill more seats, they tend to serve longer and longer periods. 74 per cent of directors attain one seat and serve an average of 71 months, and each additional seat extending service by at least two years.
“Our analysis presents evidence that NED tenure is lengthy and that board turnover during the last 15 years is largely independent of company performance,” the paper reads.
“If a high performance culture does not exist in the board, investors should ask how one can prosper within the company’s workforce?”
However, the gender mix of directors across boards has changed dramatically in the last 15 years. Female directors have increased from 9.6 per cent of the total director pool in 2005 to 33.1 per cent in June 2020.
And, while companies with boards that comprised of mainly men performed worse overall, the diminishing number of boards with this quality made it difficult to estimate the impact going forward, as more and more boards bring women in.
Despite this progress, women are still largely kept out of executive-level directorial jobs. Throughout the entirety of the 15 year period analysed, women only made up six per cent of executive director roles – with the levels of female leadership eclipsed by men named Mark or Michael.