A study by PricewaterhouseCoopers has found that the country’s top echelons are yet to mirror diversity according to race, age and gender. Photo: File
A study by PricewaterhouseCoopers has found that the country’s top echelons are yet to mirror diversity according to race, age and gender. Photo: File

Boardrooms still very much white and predominantly male

By Dineo Faku Time of article published Jan 20, 2021

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JOHANNESBURG - A STUDY by PricewaterhouseCoopers (PwC) has found that the country’s top echelons are yet to mirror diversity according to race, age and gender.

PwC reported yesterday that 81 percent of non-executive directors of JSE-listed companies were South African. However, including chairpersons, most were white at 48 percent, with black African nonexecutive directors making up 40 percent, said the report.

The report, titled “Non-executive directors: practices and fees trends report, 14th edition, 2021”, said that the remaining two categories reflected low percentages, with Indian or Asian non-executive directors at 7 percent, and coloured non-executive directors at 5 percent.

“This split remains very unreflective of South Africa’s racial demographics,” said the report.

PwC said female non-executive directors were also found wanting.

It said the JSE was still heavy weighing 71 percent towards male non-executive directors.

This finding was similar to PwC’s report last year of the Top 100 companies, which found there were 70 percent male and 30 percent female directors.

“Among industries, health care is the most equally represented, with 57 percent male and 43 percent female non-executive directors,” said the report.

The report said that the median fees for chairpersons across the entire JSE was R934 000, and deputy chairpersons were paid R603 000.

It found that non-executive directors received R554 000, and lead independent directors were paid a median fee of R723 000.

The analysis was based on actual non-executive director fees disclosed in the annual reports of JSE-listed companies for the period under review rather than forecasted fees as disclosed in the notice of annual general meetings.

“Covid-19 has made this analysis difficult, as many non-executive directors took temporary or permanent fee-cuts as a result of the pandemic,” the report said. “Alternatively, Covid-19 may have resulted in additional meetings and the associated payment of ad hoc fees for such meetings may have countered the effects of fee suppression in some instances.”

The report also unpacked the profile of a non-executive directors, saying that there were 2 106 non-executive directors serving on JSE boards.

It said that the median tenure of chairpersons in JSE listed entities had remained six years, unchanged from 2019. Median tenure for non-executive directors had increased to five years in 2020 from four years a year earlier.

The report said independence rules aim to ensure that directors avoid conflicts of interest.

“In compiling the report, we conducted an assessment of the independence of non-executive directors.

“We note that the energy industry still lags in terms of independence composition, although a gradual improvement has been noted,” the report said. It called on boards of directors to reflect age dynamics when making board appointments to ensure diversity of views. It found that the median age of South African chairpersons was in the sixties, with board members in the upper fifties.

“This indicates a need for a greater focus on transformation within South African boards, and the consideration of age dynamics when assessing effective board functioning and making board appointments,” said the report.

It said that age diversity had not historically been a major focal area, and typically board members tended to be older, as many boards equated age with experience.

“A mixture of young and old non-executive directors is important to ensure diversity of thinking and approach, and to ensure that boards are able to face the challenges of the digital age,” said the report.

BUSINESS REPORT

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