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2018 Hong Kong Spencer Stuart Board Index

April 2019

The 2018 Hong Kong Spencer Stuart Board Index is a comprehensive study of the governance practices of the constituent companies in the Hang Seng Composite LargeCap Index (HSLI), which include the Hang Seng Index 51 companies (HSI). We examine major trends in board composition, structure and compensation. This year’s edition also includes an interview with Laura Cha, the first chairwoman of HKEX.

Key findings from the 2018 Hong Kong Spencer Stuart Board Index include:

  • 61% of the HSLI companies are PRC-based. 47% are family-controlled businesses in Hong Kong or Mainland China, where the founding family has substantial stakes and influence in the company. 37% are stated-owned enterprises.
  • The average board size for HSLI companies decreased from 12.6 directors in 2015 to 11.7 in 2018, while large HSI companies averaged 12.4 directors in 2018, a slight decrease from 12.9 in 2015. Independent non-executive directors (INEDs) make up 42% of HSLI directors and 46% of HSI directors, the highest level since 2010.
  • The percentage of female board members at HSLI companies inched higher from 11% in 2015 to 11.9% in 2018. However, 17.6% of new director appointments for HSLI boards were women.
  • The average total INED fees for HSLI board directors rose to US$85,000 in 2018 from US$59,000 in 2015. However, the average INED fees in Hong Kong still trail those in the UK and the U.S.
  • Nomination committees of HSLI boards only meet 1.7 times a year on average, half as often as those in the U.S. and the UK.
  • While the HKEX recommends that boards conduct a regular evaluation of their performance, only 27% of HSLI companies reported performing a board evaluation, the majority of which are HSI companies. This is compared to a nearly 90% adoption rate of the practice in large Singapore, U.S. and UK companies.