The Spencer Stuart 2015 Hong Kong 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 50 companies (HSI). We examine major trends in board composition, structure and compensation. In our analysis, we found signs of progress in governance practices in the region since our last study in 2013:
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Here are some highlights from our research:
- On average, 41% of HSLI 88 company directors are independent non-executive directors (INEDs). This indicates that an increasing number of companies recognize that a healthy proportion of INEDs can help improve the governance and performance of the company.
- The progress of gender diversity among HSI 50 boards has been very slow: Women accounted for 9% of all HSI 50 directors in 2010, 9.5% in 2013, and 11% in 2015. Most Hong Kong boards view diversity more broadly, focusing on diversity in experience and capabilities.
- The average INED fee for HSLI 88 companies is US$59,000. The average fee for HSI 50 companies was US$65,000 in 2015, a slight decrease from the 2013 fee of US$67,000. The Hong Kong INED fee remains one-third less than the average retainers paid to independent directors in the United Kingdom (UK) and United States (US).
- The majority (89%) of HSLI 88 companies have a nomination committee in addition to the two HKEx-mandated audit and remuneration committees. Nomination committees meet twice a year on average, half as often as in the UK and US.
- More than one in five (21%) of HSLI 88 companies reported that they perform board evaluations. The practice is more prevalent among HSI 50 companies and has grown from 26% in 2013 to 32% in 2015.
Throughout our analysis, we compared practices in Hong Kong with five other countries from both ends of the governance spectrum: India, Japan and Singapore within the Asia Pacific region, which has developing governance practices, and the UK and US, which are considered to have more established governance practices.
The Hong Kong Board Index also contains detailed tables containing relevant data for each company included in the research, and an international comparison table featuring aggregated data from the 20 countries where Spencer Stuart has published board indexes.
Beyond the data analysis, this edition contains articles, including What Boards Need to Know about Corporate Culture, based on research and insights from Spencer Stuart, and Diversity – A Shareholder’s View by Sacha Sadan and Clare Payn of Legal & General Investment Management.