New activism will urge diversity
Opinion & Analysis
OPINION: Tower Investments boss Sam Stubbs likes to create a good headline.
Last week, with financial news yet to gear up for the year, he found journalists paying more than usual attention to his presentation at Tower's first media briefing of 2013.
The fund manager convenes these pow-wows quarterly. The opinions expressed are the world according to Tower, so must be taken for what they are, but a chance to chew over the issues with people who spend their days at the investment coalface is always welcome.
Of course, the briefings are also designed to make sure Tower gets its fair share of publicity, and Stubbs is never backward in coming forward.
This time he claimed that the sharemarket is showing the first signs of a bubble forming. Almost everyone else in the market disagreed with him, but the headline was assured.
However, it also edged out coverage of another point he made. Stubbs predicts that this will be the year of the shareholder activist, largely due to KiwiSaver.
The government retirement savings scheme now has two million members and over $14 billion in funds under management. The entire New Zealand sharemarket was worth $66b at the end of last year.
In other words, KiwiSaver funds are going to hold progressively larger stakes in New Zealand companies, and they are going to want to have a say about the way they are run.
The quality of governance in Kiwi corporations is lower than it should be, precisely because there hasn't been that activism, Stubbs believes.
Tower, a KiwiSaver provider, plans to be a lot more vocal about issues such as directors who have been in the job too long, and who are not adding value.
This will include diversity, Stubbs says. Tower's position is that a board made up almost exclusively of older white male directors does not add value because it does not represent the customer base the business aims to serve.
Fewer than 10 per cent of directors serving on the boards of New Zealand's top 100 companies are women. There is hope this will change now that the NZX has followed in the footsteps of its Australian counterpart, introducing rules requiring companies to report on how many women they have at the top of their organisations.
But an attitudinal shift has to occur first, and I have yet to be convinced that the "male, pale and stale" crew are on the bandwagon.
In Deloitte's Director 360: Degrees of Progress survey released late last year, 60 per cent of Kiwi directors polled said their boards had introduced diversity policies. Yet just 20 per cent said they were concerned about maintaining gender diversity.
Admittedly, it was an international study and the New Zealand sample was small. But after all the talk, committees, reports and mentoring programmes, it's a worrying indicator.
Stubbs says Tower will be choosing its battles, and while some debates over a company's performance will be conducted in public, there will be many more conversations going on in private.
Let's hope so. Retailer Hallenstein Glasson Holdings - a company with a large female customer base - still has just one woman on its board following the appointment of Glenys Shearer this month.
Shearer, who spent 28 years with the Just Jeans retail chain and brought the brand to New Zealand, will no doubt be an able addition to the team. But there is ample international research which shows that having just one woman on a board is not enough to shift its perspective.
Perhaps a bit of shareholder agitation is what it will take to finally create significant movement on the diversity issue.
Maria Slade is morning editor for the Fairfax Business Bureau. maria.slade@ fairfaxmedia.co.nz