THE ‘ASIANISATION’ OF AUSTRALIAN BOARDS

Jason Johnson - Managing Partner, CTPartners APAC

13th November 2014

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THE ASIAN CENTURY

In today’s ‘Asian Century’, the emerging and rapidly growing economies of Asia offer Australian organisations significant business opportunities:

• By 2030 Asia will represent 39% of the world’s GDP

• China, Japan and South Korea are three of Australia’s five largest trading partners

• More than three-quarters of Australia’s exports go to Asia

So it should be no surprise that most of the ASX200 see Asia as a key source of their growth over the next decade and beyond

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THE ‘BAMBOO CEILING’• While pursuing opportunities in the region, far too few companies

have broken through the so-called ‘bamboo ceiling’ by adding individuals with Asian cultural knowledge and expertise to their corporate boards

• The need for appropriate board representation of key regional business markets applies to any company investing outside of its home markets. A board simply cannot properly fulfil its duty to review and develop strategy without expertise in the relevant region

• Australian companies have been relatively poor at adding leaders of Asian descent to their boards. Among the ASX 100, only 3% of directors have Asian cultural origins (down from 4% the prior year). The number rises to 6% for the top 200 companies

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CAPITALISING ON CULTURE• The situation is now changing with a developing trend toward

some Australian companies appointing directors with Asian experience and heritage to their boards

• The recent AICD sentiment index showed that 21% of boards are seeking to increase their ethnic diversity

• We forecast that we will see a rapid increase in the percentage of directors with Asian cultural origins at top Australian companies

• Many of the same factors are at play which led to the fundamental repositioning of gender diversity of Australian boards. Between 2010 and 2014, the percentage of female directorships on ASX200 boards doubled from 8.3% to 17.6%

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THE 25 TRAILBLAZERS• 25 directors of ASX100 boards are Asian born:

• 10 were born in Singapore • 10 were born in China (8 in mainland China and 2

in Hong Kong) • The rest were born in other regions of Asia

• The data excludes those with “Asian experience”, such as:

• Dr Ken Henry of NAB’s board• Geoff Raby (former ambassador to China) of

Fortescue Metals’ board

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ASX100 ASIAN-BORN DIRECTORS Company Director Country of birth

Alumina Chen Zeng China

Ansell Annie Lo Hong Kong

Ansell Dr Marissa T Peterson Philippines

Atlas Iron Sook Yee Tai Singapore

ANZ Hsien Yang Lee Singapore

Bluescope Steel Yam Pin Tan Singapore

Brambles Tahira Hassan Pakistan

Fortescue Metals Cao Huiquan China

Goodman Yan (Philip) Hok Fan China

IAG Siang (Raymond) Keat Lim Singapore

Investa Office Fund Ming Long (ED) Malaysia

NAB Anthony Kwan Tao Yuen Hong Kong

News Corp The Hon Elaine Lan Chao Taipei

News Corp Professor Viet D Dinh Saigon

Orica Chee Onn Lim Singapore

PanAust Zezhong Li China

QBE Yun (Irene) Lien Lee China

Santos Hock Goh Singapore

Sims Metal Tamotsu (Tom) Sato Singapore

SP Ausnet Teck (Eric) Hai Gwee Singapore

SP Ausnet Tian Yee Ho Singapore

SP Ausnet Kee Choe Ng Singapore

Treasury Wine Estates Yiu-Cheong (Ed) China

UGL Hon. Doctor Kuo-Fung(Raymond) Ch’ien

China

Worley Parsons Xiao Bin Wang China

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SUCCESSFUL FEMALE ASIAN NEDS Eva Cheng, Amcor (HK) - Appointed to Amcor in June 2014

• Mrs Cheng led Amway's market launch in China in 1991 and held its Executive Chairman position for 20 years.

• Mrs Cheng is currently a Director of Trinity Limited, Nestle S.A., Haier Electronics Group Company Limited and The Link Management Limited

Margaret Leung, QBE (HK) – Appointed to QBE in August 2013

• Former CEO of Hang Seng Bank Limited

• Director of China Construction Bank Corporation, Chong Hing Bank, Hong Kong Exchanges and Clearing Limited, Sun Hung Kai Properties, Li & Fung Ltd and First Pacific Company Limited

Annie Lo, Ansell (HK) – Appointed to Ansell in January 2013

• Former CFO of Johnson & Johnson's worldwide consumer and personal care group

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CHALLENGES

Unfortunately, that change won’t be easily delivered:

• There is a notable shortage of public company, board-ready candidates with extensive senior leadership experience in the Asian region

• There is a significant difference in governance norms between Western and Asian companies

• The preponderance of private, family, or state-owned companies in Asia can mean that some Asian executives will not be a good cultural fit with Western companies

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BROADENING THE TALENT POOL

Consider the following pools of talent:

• The limited pool of Asian executives who have experience working with Western multinationals

• Western executives who have had a significant tenure in Asia, who can provide regional knowledge, contacts, and networks

• Executives with Asian cultural heritage and experience who are living and working abroad

And be more thoughtful than just seeking to appoint candidates who have prior experience as a CEO. Instead, boards must look to the key attributes and capabilities sought

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ADVISORY BOARDS

• Consider establishing an advisory board to provide connectivity and insights into the targeted Asian country or region

• While corporate boards’ responsibilities are focussed on governance, strategy, and compliance, advisory boards typically focus on business development

• Advisory board members can share professional networks as well as their insights regarding ways to navigate political systems, engage with key stakeholders, and most effectively expand into new markets

• Advisory board roles do not necessarily demand the same depth of business experience as public board directorships. The ability to help build the business in key markets is a core element

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ABOUT JASON JOHNSONJason Johnson is the Managing Partner, Asia Pacific and a member of the Executive Committee of CT Partners – a NYSE listed firm and one of the world’s sixth largest executive search firms.

Jason joined CTPartners in 2014 after its merger with Johnson - the executive search firm that he founded in 2005 and which had grown to be the largest independent search firm in the region with 18 partners and 50 staff.

He serves as Managing Partner for the Asia Pacific region in addition to working with the firm’s Board, Financial Services and Professional Services Practices.

Jason is the Global Chairman of the Association of Executive Search Consultants (AESC) - the peak body for the $11B global retained executive market.

Jason began his executive search career with NASDAQ-listed Highland Partners (formerly TMP Executive Search), where he was the youngest of more than 110 partners.

Prior to joining the executive search industry, Jason practiced corporate law in Sydney with Allen Allen & Hemsley and Andersen Legal. Jason is a highly sought-after commentator on leadership and talent issues and is a regular contributor to major business publications and media.

Jason received a Bachelor of Economics (Major in Finance) and a Bachelor of Laws (Honours) degree from Macquarie University.