It was a sharply-worded question, read aloud almost two hours into the fractious and agonisingly drawn-out annual meeting of troubled wealth giant AMP.
“In terms of future board appointments,” it asked the deflated and stony-faced members of the AMP board arranged along the stage, “which consideration will take priority – gender or ability?”
The question, submitted on Thursday via the AGM’s webcast by an unnamed AMP shareholder, prompted knowing laughter from the floor.
It was loaded with subtext, coming as it did after weeks of fraught debate about gender targets and boardroom diversity, a debate that has grown more heated with the progressive felling of every woman on the AMP board.
First was chairman Catherine Brenner, her resignation widely seen as inevitable following the revelations out of the banking royal commission that AMP repeatedly misled the corporate regulator over its “fees for no service” scandal.
Then, this week, two more women – Holly Kramer and Vanessa Wallace – withdrew their bid for re-election as the extent of shareholder anger became clear.
And in a less-anticipated departure, Patty Akopiantz, AMP’s longest-serving board member, also fell on her sword, but will stay on until the end of the year.
It was an extraordinary series of departures, but they raised almost as many questions as they answered. Why were only the women going? Why had shareholders rejected Kramer and Wallace, but not Andrew Harmos, whose re-election passed with the sullen approval of about 62 per cent of votes cast?
Shareholder activist Stephen Mayne asked why Akopiantz had not departed at the same time as Brenner – a move that he suggested may have saved the other two women, and staved off “having this whole debate about gender”.
Indeed, corporate leaders and gender diversity advocates, some of whom have been steadily slogging away on the issue for more than a decade, are questioning why the failings of one specific board, heading a company facing very specific circumstances, have – in the words former Macquarie Bank and Origin Energy chairman Kevin McCann – sparked an “avalanche” of negativity about “the quality of women on boards”.
Elizabeth Proust, the chairman of the Australian Institute of Company Directors, noted that AMP has had a series of headline-grabbing issues and personnel changes over the years (the departures of chief Paul Batchelor and chair Stan Wallis in 2002 and 2003 spring to mind).
“[They weren’t] seen through a gender lens,” she says.
At the AMP AGM, acting chairman Mike Wilkins played the “gender versus ability” question with the straightest of bats. “The good news is I think you can have both,” he said.
“We want the best contributors we can get, however I think that gender fits with that. It is important to recognise gender diversity also promotes that difference of thinking as well.”
In the leadup to her departure, Brenner – a former director of finance for ABN AMRO – was criticised by some as lacking the senior corporate experience required to run the board of a major and complex financial institution like AMP. Fair cop – though there are plenty of male directors who never served as ASX200 chief executives, their backgrounds instead in law, accounting, the public service or elsewhere.
Not to mention the many male “rising stars” whose questioningly rapid ascensions were not blamed on gender bias.
But then came reporting that touched on how much time Brenner spent with her children.
And there were the suggestions – in the media, on social media, and in what several people described as “mutterings” about town – that the cascade of female board departures at AMP somehow reflected on corporate diversity and the female director population more generally – that some, many or all of the 285 female directors on ASX200 boards had been gifted their gigs undeservedly.
One column even appeared to blame the Commonwealth Bank’s Storm Financial imbroglio, dating back to 2009, on the “female leadership” of its current chairman Catherine Livingstone, despite noting that she only joined the board in 2016.
Lost in the debate was the outperforming companies with a high proportion of women on their boards – the likes of Medibank Private, with a female chair and five of nine of its directors female, Mirvac Group, with four of eight directors female, and Andrew Forrest’s Fortescue Metals Group, which has a majority of female directors on its nine-person board.
The list of male-helmed corporate failures and scandals is also skated over despite a long and diverse rollcall.
Such a list would include the likes of HIH Insurance and GFC-era debacles like Timbercorp, Great Southern, MFS Financial and Allco Finance, whose boards and upper executive ranks were exclusively or greatly dominated by men.
One could reach further back into history, to the golden age of boardroom blokiness – to Bond Corporation or Qintex.
More recently, the genders of the chief executives and chairmen of Myer Holdings and Fletcher Building – both of which have posted downgrades and suffered shareprice dives – have passed unremarked, as were the genders of the chairman and managing director of Wesfarmers when it announced write-downs of more than a billion dollars of its UK retail asset Homebase.
Nobody asked whether the genders of the male chief executive and male chairman of handbags and accessories retailer Oroton Group played a part in that company’s plunge into administration late last year. Likewise the male chief executive and chairman at electronics retailer Dick Smith Holdings, which fell over in 2016.
Central to the debate is the issue of gender targets in corporate Australia. As Akopiantz sat on the stage on Thursday, alone among the men, it almost seemed like 2009 all over again – a year in which the proportion of women on ASX200 boards sat at a paltry 8.7 per cent. Back then, the lone woman was the exception – because most ASX200 boards had none at all.
But 2009 ended up being the year that the concept of voluntary gender targets went mainstream, as the intractable nature of the lack of diversity on boards became clear.
That year, both the ASX’s Corporate Governance Council and the AICD called on companies to set voluntary gender targets. Things ramped up in 2015, when both the AICD and the Australian Council of Superannuation Investors set a target of 30 per cent of ASX200 board seats by 2018. That number sat at 27.1 per cent at the end of March. In the first three months of the year, 29 women were appointed to ASX200 boards – more women than men for the first time.
When I employ someone it’s got to be someone I trust. That’s why I employ men. Blokes trust blokes.
Quote from an academic study
Last week, the Australian Securities Exchange released its planned update of its influential corporate governance principles, which included a 30 per cent gender target proposal for directors on ASX300 boards.
Pre-2009, targets (let alone quotas) had been long dismissed as a tokenistic and even insulting gesture, rejected by corporate men and women alike. Surely, the argument went, if women were good enough, they will eventually get into these positions? It’s all about merit, after all.
The problem was that they didn’t – not because they lacked merit, but due to other factors, research showed.
One academic paper from the late noughties surveyed male leaders and contained some enlightening anonymous quotes, such as: ”When I employ someone it’s got to be someone I trust. That’s why I employ men. Blokes trust blokes.” A report by consultant Egon Zehnder Internationalthat same year uncovered what it described as systemic bias against female directors.
Gender targets – as opposed to legislated quotas – were designed to overcome that systemic and often unconscious bias; to actually reinforce the idea of merit-based appointments.
Deloitte Australia chairman Tom Imbesi says that – rather than resulting in short-sighted or inappropriate hirings – targets had prompted boards to more carefully think about appointments. It had also contributed to a rethink of workplace policies more broadly – in areas such as flexibility, childcare, maternity leave and return-to-work arrangements – to improve retention of female talent.
“That’s where we have lost sight of the benefits these targets have provided to organisations – that broader thinking,” Imbesi says.
Reserve Bank board member Kathryn Fagg, also a Boral and Incitec Pivot director who has held senior roles in banking, resources and logistics, points out that in corporate life pretty much everything has a target against it. “Having been in business a long time, if we ever want to bring about change and achieve results, we always set targets,” says Fagg, president of Chief Executive Women. “Tracking targets is what you do – it doesn’t matter what you are looking at. It’s one of the key tools in the kit.”
ACSI, which has been pushing the issue of gender diversity for many years, interacts closely with boards and directors – its representatives held 226 meetings with 156 listed companies last year, placing it in prime position to judge the quality of directors – male and female – in corporate Australia.
“I would dispute that there are not women qualified to be on boards, and I would dispute that they are being promoted too fast to boards,” says its chief executive, Louise Davidson.
Former Macquarie chairman Kevin McCann, who is, like Imbesi, a member of the Male Champions of Change group that backs gender diversity, says he has heard complaints from men that they are finding it harder to get board seats now – and blaming “unqualified women” for taking the jobs.
But, crucially, he argues that any board that appointed an inappropriate candidate risked breaching their legally-imposed duties as directors, which require them to act in good faith and in the best interests of the company.
“I would rebut the argument that that unqualified women are being appointed to boards – to do that would be a breach of your fiduciary duties.”
Case for change
Proust, among others, has long pushed the business case for diversity, ahead of arguments about fairness. Oft-cited McKinsey research has found that companies with more gender diversity in executive ranks are more likely to post above-average profitability than the least diverse. The numbers step up again when cultural diversity is added to the list.
But a paper last year from the University of Pennsylvania’s Wharton School, which examined a series of academic studies, concluded that companies did not actually perform better with women on their boards. Nor, however, did they perform worse.
The likes of Fagg and McCann cite their own experience as evidence. Says McCann: “there’s no question in my mind that the boards today are much better than the boards of 30 years ago.”
“Anyone who has sat and watched a more balanced team sees how it operates differently,” says Fagg, who is concerned that the current debate may deter women from taking on high-profile roles.
“Corporate Australia is well past the point of debating whether diversity is a good thing or a bad thing,” Imbesi says. “Fundamentally that ship has sailed.”
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