S&P/ASX100 boards okay, say instos

Institutional investors have given S&P/ASX100 boards quite good ratings in terms of their relevant business experience, accountability to all shareholders and oversight of financial reporting.

Across 17 questions, those three categories scored the highest vote of confidence among the 41 institutions surveyed for the Australian Council of Superannuation Investors (ACSI's) inaugural board confidence report, rating 3.53, 3.36 and 3.23 out of 5 respectively.

ACSI said 3 indicated a neutral rating.

However, respondents rated independence from management the lowest of all the indicators, followed closely by oversight of mergers and acquisitions.

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Interestingly, the lack of confidence in oversight regarding M&A did not extend to the category of other capital management activities, ACSI found, with M&A scoring 2.96 compared with 3.13.

ACSI chief executive Ann Byrne said the survey offered a way to shift the conversation between boards, investors and shareowners from director independence towards competence, stewardship and the environment directors work in.

"Boards that enjoy high levels of investor confidence could be expected to attract capital at a lower cost than boards that are trusted less," Byrne said.

"Similarly, the level of trust placed in the entire cohort of listed company directors plays a role in capital formation and deployment throughout the wider economy."

ACSI will use the results of its survey to drive conversation among shareholders about investor perception of board performance.