Bob Henricks, one of Australia’s longest standing trustee directors, has accused industry associations of a tacit acceptance of the government’s push for more independents.

Henricks, the chair of Energy Super since 1995, is opposed to the change, as he sees a lack of evidence to suggest that independents will add to fund performance and is concerned at how the cost of employing them will limit the remuneration budget for fund executives.

The comments come as something of a parting shot from Henricks, who plans to stand down from his duties in a year or two and has recommended his union replace him with a female representative – Energy Super is one of 11 super funds that currently have no female trustee directors.

The government’s view on independent directors

“Given superannuation funds are expected to increase in significance and size, Australia’s superannuation governance framework must be strengthened to ensure a stable and efficient system that improves the wellbeing of all Australians.

“The Government believes that having appropriate provision of independent directors on superannuation trustee boards is a vital step towards strengthening the superannuation system.

“Independent directors provide an external, dispassionate perspective, enabling boards to benefit from a diversity of views and provide a check on management recommendations. By being free from relationships that could materially interfere with their judgment they can provide an objective assessment of issues.”

Taken from the Treasury discussion paper Better regulation and governance, enhanced transparency and improved competition in superannuation

“There has been some sort of tacit acceptance of [independents] by the organisations that represent super funds,” he said. “They seem to want to placate the government on these issues instead of stoutly defending the outstanding record of successes we have achieved by employer and employee representatives working together in the best interests of members. I do not feel we have been adequately represented in this debate by the people who we pay to represent us.”

He is opposed to the proposed one third independent director measure, as he feels it is a “policy-based approach, not an evidence based approach”.

Instead, he proposes that if there was to be change, it should be in the creation of more member elected representatives.

He put his remarks in context by stating he was in favour of a fund deploying independent directors where their expertise was required – Energy Super employs an independent director for its audit and investment committee – but directors who were also members of the fund and employed to represent members made the ideal governance model.

A further objection to independents was their cost. He contrasted his own $70,000 remuneration at Energy Super for chairing the main board and the investment committee with practices elsewhere.

“If you look around Australia at some of the other funds that have put on independents, look at how much they are paying. I do not see how that can be justified.”

He contrasted this focus on costs with what he saw as the general trend towards “over-inflated salaries” in the financial services industry.

“We are already competing for roles like CEOs with other financial services companies where there are grossly inflated salaries and to go that way is not good for members.”

This focus on costs has led Energy Super to seek the appointment of a general manager of investments rather than a chief investment officer.

“We are reluctant to use the term CIO as people start talking huge salaries straight off, so we are trying to keep that price down, by making it a little different.”

Henricks also voiced his support of greater female representation on boards and lamented the lack of any women on the Energy Super board.

“I have tried on many occasions to bring some very smart women to the board of the fund and I still try to do that regularly and remind the directors of the situation.”

Henricks revealed that he helped in the appointment of a female representative to the AUSTQ advisory board after it merged into AustralianSuper last year. And that she could develop the potential to be his replacement representative at Energy Super.

“Certainly my board is no old boys club as the directors roll over fairly regularly and there has been a number of changes in the last couple of years. I have pleaded with the representative organisations to send along women, but they have not and I do the best I can,” he said.

Join the discussion