By Anne Hyland
In the past decade, the make-up of Australian top 200 listed company boards has changed dramatically: at least one-third are now comprised of women. The focus remains on continuing to grow that number but it has also shifted to increasing the diversity of boards, and also the number of women in chair roles.
What is harder to change in the Australian company board landscape is the opacity of networks that often lead to board appointments. Chairs can make captain picks on who does and doesn’t join the boards they lead, or rely on recommendations from fellow directors, rather than allowing recruitment agencies to put forward fresh talent.
It can lead to the same pool of directors being recycled and appointed to boards, reducing diversity and the mix of skills, experiences and backgrounds in boardrooms, as well as stifling new talent. The result can potentially be weaker boardrooms, groupthink, and overloaded and over-boarded directors.
The appointment of CBA’s new director Kate Howitt has caused some consternation.Credit: Jessica Hromas
In that context, some might describe the arrival of new talent, such as Kate Howitt, to the board of the Commonwealth Bank of Australia, as refreshing.
But, instead, the elevation of Howitt, a funds manager of two decades, whose career included working for Fidelity International and AMP Capital, and also as a consultant for Boston Consulting Group, is understood to have caused some consternation within board director circles. This is despite Howitt garnering almost 98 per cent of the vote from CBA shareholders supporting her board nomination this month.
Howitt has not served on an ASX200 board, and she doesn’t have the banking experience of Lyn Cobley, a former Westpac institutional bank chief executive and a former CBA group treasurer, who was appointed to the board in 2022.
But that’s not the reason for the disgruntlement. Sources, who declined to be named for confidentiality reasons, say another female candidate was in the running to be a director of the CBA board and that she had got through the interviews and reference checking, and that she understood she had the job, only to learn later it had gone to Howitt.
It’s a claim CBA denies. “A thorough search and due diligence process is undertaken before any candidate is appointed as a non-executive director. That process was undertaken for Kate Howitt, following which she was appointed by the board. The board considers Kate Howitt to be a valuable addition and is looking forward to her contribution.”
Howitt is not the first director to be appointed to the board of CBA, Australia’s biggest company by market capitalisation, without having served on an ASX200 board. Cobley hasn’t. And in 2019, Genevieve Bell, a former Intel researcher and executive of two decades, was appointed to the board for her technology expertise. Bell left CBA last year to become Australian National University vice-chancellor.
Bell was appointed when Catherine Livingstone was CBA’s chair and the board was undergoing substantial renewal after the bank was rocked by an anti-money laundering scandal. The scandal led to the departure of then chief executive Ian Narev and that of multiple directors; CBA was fined $700 million, and the group faced an investigation into its culture.
In 2022, Livingstone was replaced by Paul O’Malley, whose career includes a successful decade as BlueScope Steel chief executive.
Howitt has held other investment roles, and also roles at not-for-profits; she chairs a bouldering gym group, and also serves on the finance and strategy committee at UNSW. On that committee is also David Gonski, UNSW chancellor and a veteran director of many of Australia’s largest company boards, and also council member and investment banker Matthew Grounds.
CBA, when announcing Howitt’s appointment, said she brought experience in strategy, capital allocation and sustainability to the board.
Since CBA denies there was another candidate pipped at the post, then gripes about Howitt’s appointment might be dismissed as sour grapes. There may also be some sniping because Howitt is one half of a power couple. Her partner is Cochlear chief executive Dig Howitt. But putting that to the side, it’s undeniable that Australia’s boardrooms need new directors. A regular criticism of the nation’s boardrooms is that they are the same old faces.
Consider some examples. Scott Perkins, a former investment banker, is the chair of both Origin and Woolworths. Could the chairmanship of one of those companies not be done by another director?
Both those companies are currently confronting big challenges that demand a lot of time: Origin with the energy transition, and the oversight and implementation of its new strategy after a failed takeover, and Woolworths as it navigates its regulatory and political headaches as well as a downturn its performance, and the guidance of a new chief executive.
Scott Perkins is chair of Woolworths and Origin and also a Brambles director. Credit: Louis Trerise
With those challenges to tackle, Perkins also has more work on his plate with a directorship at Brambles. Could Brambles chairman John Mullen not have found another suitable director who wasn’t overloaded?
But Mullens has always had a big workload himself. He’s currently under pressure from corporate governance groups and investors to step down as Brambles chair, following his appointment as chair of Qantas. Mullens is also chair of Treasury Wine Estates.
Corporate governance experts count a chair’s role as two directorships given the level of responsibilities, which means Perkins effectively holds five directorships and Mullen six.
The degrees of separation in Australian boards are few and reflect the concentration of directorships. Veteran board director Nora Scheinkestel sits on the Brambles board alongside Mullens and Perkins. She also sits on the Origin board and the Qantas board.
Maxine Brenner, who has previously been criticised for being overloaded, sits on the Woolworths, Origin and Telstra boards (they are all ASX50 companies) and all with one of the above directors. Until earlier this year, Brenner was also a Qantas director. She also serves on the UNSW council alongside Gonski and Grounds.
The question of diversity takes on a new complexion when the interconnectedness and number of directorships held by some individuals are considered.
The problem with multiple directorships is that it’s not just a question of taking a job away from new directors, but also that the workload can become unmanageable if one of the overloaded director’s companies is caught up in a crisis, or in a takeover.
While new talent is needed on boards, the vetting process needs greater scrutiny from shareholders, particularly institutional shareholders. They need to be asking more questions publicly about how directors are recruited and why they were selected, and to bear some responsibility for voting directors into those roles.
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