CGI Glass Lewis warns push by former ASX execs risks upsetting David Clarke’s authority

Proxy group CGI Glass Lewis says the ASX didn’t take Bob Caisley or Phil Galvin seriously as outside candidates, noting the two former markets executives have ‘very relevant’ experience.

Phil Galvin, left, and Bob Caisley are running for the ASX board as challenger candidates after the market operator’s recent upheavals. Picture: John Feder

Two outside directors have failed to secure backing from an influential proxy group for their push to land seats on the Australian Securities Exchange’s board, despite praising the skills and experience of the two men.

In a note to investors, proxy house CGI Glass Lewis said a push by former ASX executives Phil Galvin and Bob Caisley risked upsetting the incoming chairmanship of David Clarke, who is set to take on the top job at the sharemarket in the wake of a damaging court case.

The Australian Securities & Investments Commission is suing ASX, alleging the market operator deliberately failed to inform shareholders about the failures of its CHESS replacement program, assuring investors despite internally knowing the program was a flop.

The ASX dumped its attempt to replace its CHESS clearance, settlement and depositories scheme in November 2022, writing off $250m spent on the technology program.

CGI Glass Lewis analysts noted both Mr Galvin and Mr Caisley offered the ASX their skills and experience in the markets, warning it appeared the board of the market operator showed it had not “seriously considered these candidates”.

The report to investors notes Mr Caisley, who boasts a track record working across major technology projects at multiple exchanges, offers “very relevant” experience to the ASX “and the current technological challenges it faces”.

“In our view, his experience would be additive to the board,” CGI Glass Lewis said.

“We would guess boardroom disruption would be a more obvious reason why the ASX board may not support these candidates who are publicly critical of ASX’s governance on LinkedIn. However, the board response has not made that argument.”

Mr Caisley said he didn’t see himself or Mr Galvin as “disruptive” candidates, noting he strongly believed in working with fellow directors.

“I don’t think anyone wants to upset the apple cart,” he said.

“We think that doing the same thing and travelling in the same direction is not going to change things.”

The report goes on to note Mr Galvin, who retired from the ASX in 2007 after a career in markets, would not be supported in his board push.

CGI Glass Lewis said due the high degree of turnover at the ASX and its new chair, Mr Clarke, “we view it as being in shareholders’ interests to allow the new chair the opportunity to guide board makeup and skills without disruption from an external candidate”.

This is despite the report warning Mr Clarke risked being overcomitted due to additional directorships at AUB Group and Charter Hall, alongside fellow director Peter Nash who chairs Johns Lyng Group and sits on the Mirvac and Westpac boards.

Mr Clarke, who has said he will retire from AUB and Charter Hall, takes on the top job at the ASX as incumbent chair Damien Roche exits after a damaging court battle with the corporate regulator.

CGI Glass Lewis identifies only one ASX director, David Curran, as holding digital and IT skills.

Mr Caisley said the ASX needed more directors with technology skills, noting the market operator’s lifeblood was technology.

“Without technology they’re dead and the regulator knows that, which is why they’re chasing them,” he said.

“They had a lapse in not upgrading their technology and now they’ve got a massive technological leap to make.”

Superannuation giants AustralianSuper and UniSuper together hold a combined 22.5 per cent stake in the ASX, leaving much of the exchange in the hands of smaller shareholders.

AustralianSuper spokesman Sam Prenesti replied with a “no comment” when pressed on the fund’s voting intentions, as did UniSuper brand and media manager James Cameron.

But Mr Galvin said he had concerns the ASX’s investors had been short-changed by the market operator over recent years, with a tumbling share price and sliding returns.

Shares in the ASX are down 20.64 per cent over five years, while the broader S&P/ASX200 is up 25.06 per cent.

“Shareholders have got nothing out of the last 12 months of market growth,” Mr Galvin said.