The controversy over David Gonski’s Future Fund appointment overshadowed a thought-provoking address on corporate governance.
The controversy over David Gonski’s Future Fund appointment overshadowed a thought-provoking address on corporate governance.
IT was somewhat refreshing to hear respected business leader David Gonski admit that he still struggled at times to clearly define the role of a company director.
Speaking at an Australian Institute of Company Directors lunch in Perth last week, Mr Gonski also advocated greater diversity on company boards, across gender, age and geographies. His reasoning had nothing to do with being politically correct – it was all about getting the best talent with an informed worldview.
Mr Gonski’s address in Perth coincided with the federal government announcement he had been appointed chairman of the $73 billion Future Fund.
That caused a storm of controversy, in part because Mr Gonski had earlier been engaged by the government to advise on the fund’s board succession.
While the process was contentious – fuelled by former treasurer and current Future Fund director Peter Costello’s insistence that he was the best person for the job – nobody has doubted the ability of Mr Gonski to be a good chairman.
Ironically, one of the themes of his AICD address was to downplay the role of chairman.
Rather than being the omnipotent leader, Mr Gonski said a good chairman was like an orchestra conductor, ensuring that all directors contribute to board deliberations. That, no doubt, will be an interesting exercise when he and Mr Costello sit together around the Future Fund board.
Diversity was another theme of Mr Gonski’s address – in terms of board composition and career paths.
His call for greater diversity included more consideration of women on boards, saying it was obvious that boards would have the best composition if they drew from 100 per cent of the population.
“I don’t know how we men got away with it for so long,” Mr Gonski observed.
He also called on Australian businesses to bring in directors from other geographic regions.
Mr Gonski practices what he preaches in this regard. His board positions include being a director of Singapore Airlines, a role he says has been very beneficial in exposing him to different views and perspectives.
While a handful of large companies, such as BHP Billiton, draw directors from a range of geographies, Mr Gonski urged more Australian companies to do the same.
In a Perth context, many companies have overseas-based directors, but almost invariably they represent major shareholders.
Mr Gonski also endorsed the practice of chief executives sitting on external boards – motivated, again, by a desire to give people a broad worldview.
He acknowledged this wasn’t always appropriate, for instance in the case of newly appointed chief executives, but urged more companies to adopt this practice.
One of the few Perth examples involved current Woodside chairman Michael Chaney. When he was Wesfarmers managing director, Mr Chaney also served as a director of BHP Billiton.
His successor at Wesfarmers does not hold any external corporate roles, but Richard Goyder does sit on multiple not-for-profit boards, and is an AFL commissioner.
Mr Gonski suggested that Australians could take the concept of career diversity to a new level by following the lead of the US, where individuals will work in business for a period, then have a stint in academia, and serve as an adviser to governments, and have a career as a professional director.
Having recently chaired a review of school funding for the federal government, Mr Gonski has made his first major foray into that sector.
Reflecting on the challenges facing directors, Mr Gonski said many people mistakenly assumed he was across all the details of each business.
Ultimately, he said, directors owed their duty to the company. In practice, the role of directors was about trade-offs, balancing the interests of shareholders, the community and other stakeholders.
He also canvassed the vexed issue of annual general meetings, which many observers consider anachronistic.
Mr Gonski proposed major reform, saying AGMs were not a good forum for voting on formal resolutions. He wants AGMs to be more informal, a forum for discussion so that directors can engage with shareholders.
Given the low turnout at most AGMs, surely that is worth considering.
