Directors warn of blurring line between management and board

Graeme Samuel speaking at the annual Australian Council of Superannuation Investors conference in Melbourne this morning. Aaron Francis/The Australian

A good director should be intelligent, independent and courageous enough to challenge management, according to OZ Minerals chair Rebecca McGrath.

The former BP executive who was speaking at today’s ACSI conference is fast developing a reputation as one of the go to directors in corporate Australia.

She was speaking in the context of comments by a fellow Suncorp chair Christine McLoughlin that the regulatory backlash threatened to blur the lines between management and the board.

Asked by The Australian just what is the role of the board McGrath told the conference “to focus on direction, boundaries and spaces.”

McLoughlin said it was stewardship, strategic direction, hiring and firing the chief executive and to define culture.

Westpac chair Lindsay Maxsted said it was to represent shareholders and to ensure execution on what is agreed.

Graeme Samuel, an author of the landmark APRA Committee report on the CBA, backed McGrath’s description of a director’s duty.

He also praised NAB as the only financial company which has released its responses to the CBA report.

APRA had asked banks to review their governance in the wake of the CBA report.

Transparency was key Samuel said because it would ensure the organisation knew what was being said.

He cautioned measuring regulator responses to the royal commission by the number of cases they instituted, noting “the Federal Court doesn’t have the skills to handle a flood of cases.”

He said the key for the board was governance, culture, accountability and remuneration.

Ed John from ACSI noted protests against board remuneration reports were not based on the level of non financial measures in executive pay but was on accountability.

In the wake of the CBA-Austrac scandal, the lowest bonus received by CBA executives was 95 per cent which was clearly a joke.

Samuel said there were several lines of responsibility in an organisation starting at the coal face and leading ultimately to the board.