July 18, 2012 – Presentation by Giri Tenneti, ASX

1. ASX Corporate Governance Council Diversity
Recommendations
Giri Tenneti Education Executive, ASX 19 July 2012

2. Presentation outline
 The Corporate Governance Council
 ASX role and actions
 Impetus for diversity measures
 CGC Recommendations and commentary on diversity
 What ASX is doing
 What other agencies are doing
 Evidence of change
 ASX Monitoring results

3. ASX Corporate Governance Council
 ASX chairs the ASX Corporate Governance Council
(“CGC”).
 This is a body made up of 21 finance sector industry
organisations which develops and publishes “Corporate
Governance Principles and Recommendations” for listed
entities.
 The Recommendations cover wide-ranging matters of
corporate governance such as board role, responsibilities
and composition, codes of conduct, controls around
financial reporting, continuous disclosure, shareholder
communication, risk management framework and
remuneration framework.

4. ASX CGC cont’d
 In July 2010 the CGC introduced amendments to its
principles and recommendations relating to diversity, and
more specifically gender diversity.

5. ASX role and actions
 Under its listing rules, ASX requires listed entities to report in
their annual reports whether they have followed the CGC
recommendations and "if not, why not".
 ASX monitors compliance with the recommendations
 ASX has held seminars to assist listed entities and other
ASX stakeholders to meet their ASX obligations.

6. Impetus for diversity measures
 CAMAC report on Diversity on Boards of Directors
specifically recommended the use of the CGC Principles to
achieve reform in this area, having regard to:
 Poor record of corporate Australia on gender diversity;
 International developments;
 Financial studies that suggested diversity could help
drive competitiveness.

7. Impetus for diversity measures (cont’d)
 Poor record on diversity – as at June 2009:
8.3% of top 200 directors were women;
4.9% of top 500 directors were women;
3.5% of all listed company directors were women;
66% of the Top 200 companies, and 84% of listed entities
overall, had no women board members at all.
 International developments - Norway had brought in quotas
and some European countries were on their way to a quota
system.

8. Impetus for diversity measures (cont’d)
International developments
UK: CG Code Norway: Legislation - Netherlands: CG Code - boards should
- board appts 40% quota aim for diversity (not restricted to gender)
to have
US: SEC
regard for
Regulations -
benefits of
disclosure if
diversity incl
diversity
gender
considered in
nomination
Germany: CG Code - consider process
diversity in management and
board appointments
France: Legislation - 40%
quota by 2016 to pass Senate
Spain: CG Code + Legislation - 40% quota for certain
companies that becomes compulsory in 2015

9. Impetus for diversity measures (cont’d)
 Financial studies:
 Goldman Sachs JB Were, Australia’s hidden resource
– the economic case for increasing female
participation:
Closing the male / female employment gap could boost
Australian GDP by 11% and if the gender
remuneration gap was also closed it would boost GDP
by 20%.

10. Impetus for diversity measures (cont’d)
 Financial studies cont’d:
 Catalyst Research 2007, The Bottom Line: Corporate
Performance and Women’s Representation on Boards:
Fortune 500 companies with the highest representation
of women board directors had significantly increased
financial performance (return on equity, return on
sales, return on invested capital)

11. CGC Diversity Recommendations
 Effective for financial years commencing on or after 1
January 2011
 New CGC Recommendation 3.2 - boards of all listed
entities should establish a diversity policy and disclose the
policy or a summary of it
 The policy should include requirements for the board to:
 set measurable objectives for achieving gender
diversity
 review both the objectives and the progress in
achieving them annually

12. CGC diversity recommendations cont’d
 New CGC Recommendations 3.3 and 3.4 - companies
should disclose in their annual report:
 the measurable gender diversity objectives set
 progress towards achieving them
 the proportion of women at three levels:
 board
 senior management
 whole of organisation

13. Guidance commentary
 Commentary accompanies the recommendations. Not
mandatory to report against the commentary (only the
recommendations).
 Commentary designed to assist companies to understand
the reasoning for the recommendation, highlight factors
which may be relevant to consider and to make suggestions
on how to implement the recommendation.
 The commentary contains much detail in the case of
diversity recommendations.

14. Guidance commentary (cont’d)
 Recommendation 3.2 - 3.4 commentary:
 Should introduce appropriate procedures to ensure the
policy is implemented effectively
 Should include an internal review mechanism to
assess the effectiveness of the policy
 Onus is on companies to work out how best to present
meaningful figures on the participation of men and
women in the workplace and the roles in which they
are employed

15. Guidance commentary (cont’d)
 Recommendation 3.2 - 3.4 commentary (cont.):
 Board, or nomination or remuneration committee,
should have duty, at least annually, to review and
report on the relative proportion of women and men in
the workforce at all levels of the company/economic
group
 This obligation should be included in its charter

16. Guidance commentary (cont’d)
 Recommendation 2.4 commentary:
 Board nomination committee should specifically consider
diversity in succession planning
 Should be greater transparency in the board selection
process, especially:
 the process by which candidates are identified and
selected (eg are professional intermediaries used?)
 the steps taken to ensure a diverse range of
candidates are considered
 the factors taken into account in the process

17. Guidance commentary (cont’d)
 Recommendation 2.6:
 Corporate governance statement in annual report
should include a statement as to the mix of skills and
diversity the board of directors is looking to achieve in
its membership
 Recommendation 8.1 commentary
 Remuneration Committee should specifically consider
remuneration by gender and report to the board

18. Guidance commentary (cont’d)
 Box 3.2 – Suggestions for the content of a diversity policy
 Express a commitment to diversity and articulate its
benefits
 Identify ways to promote a culture which embraces
diversity
 Identify factors to be taken into account in selection
processes
 Include identifying programs and initiatives that will
assist employees to develop the skills and experience
that will prepare them for senior management and board
positions

19. Guidance commentary (cont’d)
 Box 3.2 – Suggestions for the content of a diversity policy
(cont’d)
 Recognise that employees at all levels may have
domestic responsibilities
 Consider the transparency of board processes,
review and appointments
 Address the extent to which the achievement of
measurable diversity objectives will be linked to the
KPIs for the Board, CEO and senior executives

20. What ASX is doing
 ASX ‘Diversity resources for listed companies’ web page:
http://www.asx.com.au/compliance/education_research/diversity
 A summary of changes to CGC Principles
 Generic legal guidance on legal issues to watch when
implementing diversity measures
 Guidance from human rights agencies on discrimination
law framework
 Diversity papers
 Diversity consultants
 Other useful resources

21. What others are doing
 AICD – ASX 200 Chairmen’s Mentoring Program, Board
Diversity Scholarships, board-ready women database
 BCA – ‘C Suite’ Project
 Women on Boards – Boardroom Diversity Index, Pathways
to Directorship Professional Development and ‘My Mentor’
programs
 CSA/WOB – Joint Guidelines on Complying with Principle 3
 Chief Executive Women – Talent Development Program and
CEO Kit
 Australian Human Rights Commission – Male Champions of
Change Group
 Diversity Council Australia – Early Adopters Group

22. Early signs are encouraging
Change is happening…slowly. AICD figures as at 14 June 2012
show:
•23% of all new Board appointments on ASX 200 entities in
calendar 2012 have been women compared with 28% in calendar
2011, 25% in calendar 2010, 5% in FY09, and 8% in FY07 and
FY08
•Women directors of ASX 200 entities, as a percentage,
increased to 14.3 %, up from 10% as at Sept 2010 and 8% as at
30 June 2009
•21 women have been appointed as directors of ASX 200 entities
so far in 2012 compared to 68 in calendar 2011, 56 in calendar
2010 and 10 in calendar 2009.

23. ASX monitoring results
 ASX reviewed annual reports for 31 December 2011 – 210
entities
 18 letters sent to entities asking them to address the
diversity recommendations by way of market
announcement
 30 entities followed up with a request for better disclosure
in future years
 ASX has commissioned report analysing the 31 December
2011 disclosures – not yet released.

24. Questions?

25. ASX Corporate Governance Council Diversity
Recommendations
Giri Tenneti Education Executive, ASX 19 July 2012