Opening the conference, AICD chair John Atkin FAICD and MD and CEO Angus Armour FAICD said governance issues went beyond banking, adding the AICD would lead the conversation on lifting national standards.
- Directors’ duties The AICD supports the current formulation of directors’ duties. However, it will lead a conversation in the director community and with stakeholders to test the understanding and application of the best interests’ duty in governance practice to determine what elements and approaches make it “fit for purpose." There is a clear gap between how we [as boards] think we are performing and what the community thinks,” Armour said. “The community needs to trust that we as directors take account of stakeholder, ethical and societal issues as part of our duties.”
- Standards and professionalism The AICD will strengthen its Member Code of Conduct and clarify its application so it is clearer about the expectations of membership. It will also update its Professional Development framework to reflect the standards of practice and ethics members expect. It will continue to advance the standards of directorship as a profession through education and advisory work, and through its advocacy agenda to better translate the governance practices it teaches to the practices that directors apply.
- Accountability At the heart of the public’s distrust of institutions is a belief that when things go wrong there are few consequences. Directors must start by convincing the community that boards are accountable. The AICD will consult with stakeholders and practising directors on proposals to enhance accountability. At the same time, it must be open to other models. For example, the debate over whether there should be annual director elections for listed companies (as in the UK), increasing the visibility of board accountability to shareholders. Another concern in the community is “over-boarding” — that some directors have too many listed directorships. ASIC is focused on this issue and there is some debate on whether there should be guidance on the number and nature of board commitments.
- Governance of culture and remuneration Ethical decision-making sits at the heart of director practice. Boards must set the tone that misconduct is dealt with swiftly and visibly. The AICD will take the lessons of the banking Royal Commission and other inquiries into good practice principles for governance of culture and remuneration. This is relevant to NFPs, private companies of any size, superannuation funds and listed companies alike. Working with members and stakeholders, the AICD will provide more guidance and practical frameworks to support directors. On remuneration, for example, balancing short- and long-term interests between different investors, shareholders and stakeholders creates a challenging environment for boards. The AICD will partner with investor groups and stakeholder organisations to drive a long-term focus in remuneration models.
The AICD is releasing an Issues Paper inviting feedback from members. Click here for more information.