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Massive changes in SA Boardrooms

By Mpho Seboni

The number of previously disadvantaged individuals (PDIs) taking their places around SA corporate boardroom tables increased dramatically in the past year. And more women than ever are among these directors.

In addition, directors’ fees have risen sharply, with the total average fee paid to non-executive directors having risen by approximately 50 percent since 2001.

These are among the findings of the 2002 Spencer Stuart Board Index, an annual survey of SA Boards of Directors conducted by the leading executive search firm.

A key finding is that the percentage of PDI directors nearly doubled between 1999 and 2002. It has risen from 12,8 percent in 1999 and 13,6 percent in 2001, to 22,4 percent in 2002.

This clearly indicates that Boards are taking the question of director nominations very seriously, and are making strides towards ensuring Boards are more representative of the demographics of SA. But with less than a quarter of directors falling into the PDI category, there is still a long way to go.

The same is true for the gender issue. There is general acceptance across public and private enterprises that boards of directors should include at least one woman – and more respondents than in the past have one or more female directors. Indeed, 25,8 percent of the boards in the sample had more than one female board director, up from 20,3 percent in the previous year’s study. However, women still account for a paltry nine percent of all directors.

Interestingly, government is leading the way in terms of gender equality at top executive level. According to the 2002 Spencer Stuart Board Index, parastatals have more female board members than private sector companies.The survey also found that directors’ fees in South Africa are also on the rise. Non-executive directors are now paid more than three times as much as they were in 1996.

These increases are not surprising. The role of director – and the non-executive director in particular – now carries far greater risk. There is therefore an urgent need to attract, and retain, better qualified people, than in the past.

Other major findings of the Spencer Stuart Board Index for 2002 include:

Sharp differences in fees paid to the audit committee of company boards of directors versus the fees paid to members of remuneration committees. Reflecting the ever-increasing importance of the audit committee, remuneration of its members has increased sharply, while that of remuneration committee members has dropped drastically.

In line with the recommendations of the King II report, there has been a sharp rise in the separation of the roles of CEO and chairperson in South African companies. Only 12 percent of companies now have one person performing the roles of both CEO and non-executive chair, compared with 42 percent in 2001.

South African company boards are now more evenly balanced in terms of executive and non-executive directors In line with King II recommendations), while boards are becoming smaller.

The average age of directors in South Africa is declining, while the retirement age from boards has increased.

Mpho Seboni is a partner at Spencer Stuart, a leading privately held, global executive search firm. He can be contacted on (011) 880 2217

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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