When we mug investors contemplate buying shares in a company we usually take note of past dividends paid as an indication of what are likely in the future. It is usually only the institutional investors who pay much attention to the faces on the board of directors and that seems to be something of a closed shop operation.
When a board seat becomes vacant it seems that the present directors nominate a replacement and that person is usually elected at the next company AGM. In this country, there exists a wide pool of people with business experience deemed suitable for such positions - and the pay they receive is certainly generous. Many divide their time sitting on a number of company boards.
The AMP revelations at this banking Royal Commission have been a disaster for AMP shareholders. The shares have dropped to shed billions of dollars of shareholder value because the company has broken the law in many ways and gouged wealth illegally from its customers. The company chairwoman has fallen on her sword and resigned, and shareholder anger is rising to a crescendo to sack the entire board. Those directors have offered to take a twenty-five percent pay cut, but that is unlikely to satisfy the people who own this oldest of Australia's prestige companies.
A similar situation exists with the big four banks that dominate the Australian money market. This Royal Commission has revealed a consistent charter of illegal operations that can only be described as deliberate theft. Customers were charged for services that were not provided and this happened under the guidance of each banks board of directors. There seems a strange reluctance for the law to move and lay charges against the people who broke the law.
The minions of bank employees who applied this illegality to customer accounts did so under the direction of the banks board. It would be reasonable to expect to see those executives removed from their board rooms in handcuffs and take the " walk of shame " before the media television cameras. This criminality took place under their direction, and along with the chair people, they should have to face a court of law and account for what happened on their watch.
Being elevated to the board of a company is an honour, but it also comes with a responsibility to ensure that company operations meet the expectations of the law. This Royal Commission has uncovered blatant criminality that has enhanced the companies bottom line by billions of dollars. Not only were the customers of these corporations defrauded but now the shareholders are suffering a capital loss because the shares of these companies are in public disfavour.
The forced resignation of CEO's or board members will not suffice. They simply walk out the door with a large superannuation cheque in their pocket and no prison time for the illegalities they have condoned. It is ludicrous that a common criminal who steals someones wallet gets the odium of a court appearance and probably jail time, and the fat cats who preside over the operations of giant corporations walk away unscathed after the theft of millions.
There is the expectation that the culmination of this Royal Commission may see that situation eventuate !
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