Home' A Plus Magazine : March 2013 Contents 16 March 2013
Though by no means the only measure,
women are the most obvious glaring anom-
aly when it comes to boardroom diversity in
Hong Kong. Although women account for
roughly half the city’s population, they com-
prise just over 10 percent of board positions
in Hong Kong’s listed companies, according
to HKEx data. Four out of 10 listed compa-
nies have no women on their board at all,
the exchange noted.
“Gender diversity in Hong Kong is some-
where between poor and extremely poor,”
says Keith Pogson, leader of Ernst & Young's
Asia Pacific financial ser vices office, im-
mediate past president of the Hong Kong
Institute of CPAs and a prominent diversity
advocate in the accounting profession.
HKEx statistics also show that two-thirds
of directors on Hong Kong-listed issuers’
boards are between the ages of 41 and 60.
Nearly a quarter of directors are over 60.
“ While gender is obviously important,
age is important, too,” says Jamie Allen, sec-
retary general of the Asian Corporate Gov-
ernance Association in Hong Kong.
Chinese companies listed in Hong Kong
are setting the pace when it comes to young-
er directors, Allen notes. “A lot of [Mainland]
companies being listed in Hong Kong have
chairmen and chief executive officers young-
er than 50,” he says. “If you look at the boards
of Hong Kong companies, particularly bigger
ones, they tend to be much older.”
Ethnicity is another factor, says Al-
len, though not a critical one for domestic
companies. “If you have an international
company with no international or foreign
directors then the question is: do you have
a board that really has the range of skills
and expertise you’re looking for?”
While discussions on diversity typically
refer to visible indicators such as gender,
ethnic background and age, there are other
factors, notes Fern Ngai, chief executive of
Community Business, a Hong Kong-based
non-profit organization seeking to advance
corporate social responsibility in Asia.
“ These may include an individual’s cultur-
al and educational background, professional
skills and experience, as well as their person-
ality and behavioural traits,” Ngai adds.
Pogson argues for more non-Hong Kong
residents to be appointed to boards. “A lot
of areas where companies struggle is when
they want to be multinational rather than
national,” he says. “ They lack the cosmo-
Another consideration, more peculiar to
Hong Kong and Asia in general, is directors
who are family members of company own-
ers. “ There’s a very big difference between
family-owned companies and companies
where there is no one clear majority share-
holder,” says Pogson. “Management [in com-
panies that aren’t family owned] is much
stronger and corporate governance is there
to protect the shareholder interests.”
Benefits of diversity
The jury is out on the exact correlation be-
tween board diversity and performance
metrics such as profitability, efficiency or
share price, and HKEx is cautious about gen-
eralizing about board diversity and better-
“ Numerous academic research indicates
that increased diversity on boards is asso-
Hong Kong is the latest major financial market to
take action on board diversity — especially in terms of
gender. “The lack of women on boards is a worldwide
phenomenon and a reflection of a wider issue concerning
diversity,” says David Graham, chief regulatory officer and
head of listings at Hong Kong Exchanges and Clearing.
Some European countries, such as Norway and France,
have introduced mandatory board quotas for women.
“ We’re not against mandatory quotas but it’s open to
abuse,” says Jamie Allen, secretary general of the Asian
Corporate Governance Association. “The good companies
take it seriously but the majority would do the minimum to
In the United Kingdom, the percentage of women on
the boards of the 100 largest listed companies has risen
over the past year to a record 15.6 percent. The British
government has told FTSE 100 companies to have a
minimum 25 percent of female directors by 2015 or else
face as-yet-unspecified measures.
In Australia, 15.4 percent of ASX 200 board members
were women as at 21 February, according to the Australian
Institute of Company Directors. More than 50 of the index’s
boards still do not have any women directors.
Listed companies in Australia must issue a statement
about the mix of skills and diversity that the board is
looking to achieve. “New directors are generally appointed
to fill perceived gaps in skills, experiences and knowledge,”
notes Katie Spearritt, chief executive officer of Diversity
Partners, a consultancy in Melbourne.
The situation in the United States is little better, where
by the end of 2012, women held 16.6 percent of board
seats at Fortune 500 companies. Kathy Liu, chief financial
officer at apparel maker Kizan International in Brisbane,
California, notes increasing pressure in the U.S. from
institutional investors demanding board diversity.
“The California Public Employees’ Retirement System
[the largest public pension fund in the U.S .]... is one of
the leaders in this area, promoting diversity of skill set,
background, perspective and experience,” says Liu, a Hong
Kong Institute of CPAs member.
Liu noted that the pension fund has written diversity
guidelines into its corporate governance to encourage
companies to take into account historically under-
represented groups on the board, including women and
minorities, and raises board diversity issues with under-
performing companies in its US$175 billion portfolio.
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