South Africa:Boards of Travel,Health Groups Out of Line
By Tamar Kahn
he majority of travel and leisure and health companies listed on the JSE are falling short when it comes to appointing independent chairmen and nonexecutive members to their boards of directors, contravening the King code of corporate governance, according to two new Board Barometer reports published yesterday.
The Board Barometer reports, compiled by Leaders Unlimited consultants and research house TerraNova, benchmark companies on the composition of their boards. The first report, on the food and beverage sector, was released last month
Taken together, the three reports suggested that government regulation had played an important role in pushing companies to improve the composition of their boards, said TerraNova founder Brett Bowes.
Eight out of the 12 companies listed in the travel and leisure sector did not have an independent board chairman, and most firms failed to ensure the majority of their nonexecutive directors were independent.
Half of the companies scored one or less out of 10 on this measure, TerraNova said.
"It's symptomatic of what I would call an adolescent sector ... restaurants score worst, as they are often still controlled and held by families," said Bowes.
The independence of board directors and chairmen was encapsulated in a "role-diversity" score with a sectoral average of 4,4 out of 10. The tightly regulated gaming subsector scored 4,78, markedly better than restaurants, which were subject to less stringent controls and scored 2,83.
The Board Barometer reports were not intended to "name and shame" companies, said Bowes, declining to provide a detailed ranking of the 12 travel and leisure companies, which are: Comair, City Lodge, Tourvest, IFA Hotels & Resorts, Don Group, Cullinan Holdings, Sun International, Phumelela Gaming & Leisure, Gold Reef Resorts, Spur, Famous Brands and King Consolidated.
However, he said Sun International was the pack leader on independent board members.
Similarly, only one of the four listed health-care companies had an independent chairman, said Bowes. The health-care sector includes pharmaceutical companies Aspen and Enaleni, and private hospital groups Netcare and Medi-Clinic.