Review of Commonwealth Government Business Enterprises ...

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Proposed Change:
3.7 2.13 Board appointments should normally be for terms of three years. The Board
Nomination and Remuneration Committee is free to include retiring Directors in its list of
candidates.
a. The term for non-executive directors should not normally exceed two terms (i.e. six
years) and for the Chair three terms (i.e. nine years). Appointment terms may be
staggered or varied in duration to maintain board continuity.
b. Appointments exceeding two terms will be considered on a case-by-case basis taking
into account exceptional circumstances.
3.6 2.14 The Remuneration Tribunal determines remuneration for directors that is compatible
with their roles and responsibilities, and having regard to, amongst other things,
rates paid by the private sector, and federal public offces.
3.8 2.15 The Shareholder Ministers may, at their discretion, remove directors at any time prior
to the completion of their term of appointment.
a. In the event that a GBE is not performing satisfactorily, the Shareholder Ministers
will initiate prompt remedial action. Dismissal of the directors would be considered,
particularly in any case of failure to keep Ministers adequately informed, and in
situations of ongoing under-performance in respect of fnancial or other aspects of the
operations of the business.
b. A director may be placed in a situation where continuing to be a GBE director could
embarrass the GBE or the Shareholder Minister(s). In such situations, the director
should raise the issue with their Chair immediately. The Chair in turn will decide
whether it is necessary to raise the issue with the Shareholder Minister(s). In a worst
case situation, the director may be asked to resign, or failing that, be removed.
2.6 Board Induction, Training and Performance Evaluation
2.6.1 As is the case in the private sector, board knowledge, skills and performance can be
strengthened through effective induction programs for new directors and ongoing training,
and regular performance reviews of all directors. 21 Better practice would also indicate that
senior managers could beneft from induction and training programs. 22
2.6.2 Training enables directors to build on their existing skills, and become more effective
participants in board discussions and in the execution of their directors’ duties. In addition,
regular board reviews provide an assessment of how a board is performing. Performance
reviews therefore serve as a guide to the effectiveness of directors and can improve
performance through feedback.
2.6.3 The ASX Corporate Governance Council’s revised ‘Corporate Governance Principles and
Recommendations – 2 nd Edition’ (the ASX Principles) recommends that the performance of
the board be reviewed regularly and that induction procedures include elements designed
to allow new board appointees to participate fully and actively in board decision-making. 23
Exposure Draft
21 ASX Corporate Governance Council, Corporate Governance Principles and Recommendations – 2nd Edition (ASX Principles), pp15 and 19 (August 2007).
http://www.asx.com.au/governance/corporate-governance.htm
22 ASX Principles, page 15.
23 ASX Principles, page 19.