Remember when Chairman David Turner and Chief Executive Officer Ian Narev crashed the Commonwealth Bank of Australia by allowing a “complacent culture” and a “lack of accountability” to flourish within the company?
Or when Wesfarmers Ltd. Chairman Michael Chaney and Managing Director Richard Goyder bought a U.K. hardware chain for $460 million and wrote it down to the tune of $700 million two years later? How about when the share price of department store Myer Holdings Ltd. fell by more than half under the leadership of Chairman Paul McClintock and Chief Executive Richard Umbers?
And, more to the point: Do you remember all the sage commentary about the perils of appointing male executives to senior positions?
No? That’s because the question was never asked. But switch the genders around, and that’s how Australia is framing the crisis within AMP Ltd. after the fund manager was caught by a government inquiry misleading the regulator about charging fees without providing a service in return.
Former AMP Chairman Catherine Brenner was “a good example of intentional gender bias getting the wrong result,” according to one of many unattributed snipes in an Australian Financial Review article that appeared after she resigned last month. Improbably, the piece painted her rise to the job – after a three-decade career in financial services including seven years on AMP’s board – as an ‘All About Eve’-style tale of charm and connections trumping experience and intellect.
For all the attention around Brenner and the three other women who’ve now resigned from what was until recently a 10-person board, you could almost miss the fact that the chief executive at the time of the scandal was Craig Meller, who’s in full possession of a Y chromosome.
AMP was “going to need some people who’ve already got maybe deeper experience than you might be able to use normally” in refreshing the board, the same paper quoted Brenner’s replacement David Murray as saying this week – with the authors making the heavy implication that this was a roundabout way of saying “men.”
It’s a pretty sorry performance for a country that has lately been making some progress in corporate diversity, with women comprising more than half of appointments to boards of S&P/ASX 200-listed companies during the first three months of this year amid a push to reach 30 percent representation by December.
For one thing, much of the behavior uncovered by the Royal Commission that led to AMP’s board shakeup happened at a time when women had a much smaller role in Australian corporate life. They comprised just 8.3 percent of ASX 200 directors as recently as 2009, and only cracked 25 percent of the total in 2016. Given that board-decision making is collective and confidential, the idea that outsiders can pronounce women directors solely responsible for any shortcomings – rather than the majority of board members who are men – barely passes the laugh test.
For another, all the evidence points to women having a positive, rather than a negative, effect on performance. Comparing three-year average returns on equity for 428 publicly traded Australian companieson which Bloomberg has data to a range of corporate governance measures, the strongest correlation with improved performance is the share of women on the board, followed by their share in the company’s workforce as a whole.
That fact is likely to mean the current outbreak of sexism is the dying spasm of Australia’s old boys’ network, rather than a true turning point, according to Judith Fox, chief executive of the Australian Shareholders’ Association, which represents retail investors.
“This is a bit of a last gasp,” she said. “The broader diversity issues are really embedded now in corporate thinking. I don’t think companies are going to go backward at this point.”
Let’s hope not.
Australia has finally started making strides on improving the gender equality of its boards, which should improve returns to investors as well. The off-record whingeing of a few old dinosaurs shouldn’t let the country snatch defeat from the jaws of victory.
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There’s also the fact that the most extensive fees-for-no-service activity was carried out by Commonwealth Bank, National Australia Bank Ltd.and Australia & New Zealand Banking Group Ltd., which all had male chairmen and chief executives throughout the period.
We’ve picked return on equity as a yardstick rather than (for instance) total shareholder return because it’s a measure of a company’s performance, rather than the premium the stock market puts on the shares. Australia’s substantial small-cap mining space, which tends to be heavily male-dominated, is driven more by commodity prices and the crap-shoot of mineral exploration results than anything that can be put down to the ability of boards and management.
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