Industry funds are taking steps to appoint independent trustees ahead of any government decree forcing them to do so.
In contrast to media reports that have depicted industry fund boards as fighting the Treasury proposal to have at least a third of their directors independent of employer or employee organisations, several funds are already changing their structure.
Discussions at the recent Conexus Financial Chair conference revealed that the chairs of Media Super, Kinetic Super and Equip have all stated a willingness to appoint independents. While the chair of a mid-sized Victorian fund is exploring a move to the one third, one third, one third structure.
Frank Gullone, the independent chair of the Kinetic, said his board was taking a skills-first approach to new appointments and had changed its constitution to allow this to happen.
Any future board vacancy will specify the skills the board needs and it will be happy to appoint them from either the member base, an employer or from an individual who is independent of the fund.
“We are not waiting for the government to tell us, you need to go down that path,” said Gullone and he believes most industry funds were keeping an open mind on independents too.
Gerard Noonan, chair of Media Super, said while he was a passionate supporter of the equal representation model of governance, he was not averse to appointing independents to fill a skill gap. “If we had up to a third of our board as independents, it would not cause a great deal of grief, so long as we preserved our great strength of equal representation of trustee directors nominated by our employers and unions.”
Another fund open to a change on independents, if it brings better governance, is Equip. Its chair, Andrew Fairley, said: “We in the industry funds aspire to have an absolutely outstanding set of directors to run a financial services business. We have and will continue to have substantial amounts of competition.”
Tom Garcia, chief executive of the Australian Institute of Superannuation Trustees, saw such moves as typifying a growing focus on getting the best skill sets onto boards, pointing out that there are 60 independent trustees currently sitting on trustee boards. But, he stressed that it should be left up to funds to decide the best board structure not the government.
The proposed one third employee, one third employer and one third independent structure was too inflexible to what might work best for funds, he said, adding: “We do not believe that this change is in the best interest of members, because there is no proof anywhere that it works.”
The consultation on independent directors, which was launched by assistant treasurer Arthur Sinodinos, closes on February 12.