Superannuation funds that nominate a director to the board of a company may fail in their efforts to change the organisation’s strategy and could lose flexibility to manage their investment, leading chairmen caution.
“While interest rates are holding at current levels it does feel as though we are at the peak of this cycle of increases, which provides greater certainty in decision-making,” said Christine Bartlett, director of property company Mirvac and TAL, a life insurer. Katrina Rathie said protocols and legal guard rails would need to be put in place before a super fund could nominate a director to a board.But, Mr Negus said, “that director will need to understand that it is not possible to represent a single issue at the board table and one director does not necessarily guarantee the outcome that the super fund wants”.
“With nominee directors, the risk is that super funds will be inhibited to trade their shares when it makes sense to do so, or to vote against unanimous board decisions supported by their nominees.”Other directors expressed concerns about the potential for insider trading, as well as conflicts of interest because nominee directors would have access to confidential information about the company.