Africa’s Non-Executive and Independent ... - Sirdar Group...The Sirdar Group focuses on educating,...
Transcript of Africa’s Non-Executive and Independent ... - Sirdar Group...The Sirdar Group focuses on educating,...
Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses
Second Edition | 2019
Boards with at least
one independent director are outperforming
boards without one
Cape Town South Africa
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3
Executive Summary 4
Independent Directors Add Value 6
Non-Executive and Independent Directorsrsquo Fees 9
Diversity in the Boardroom 18
African Board Perspectives ndash A Deeper Look 21
Conclusion 26
Data and Sampling 28
Pre-register for 2020 33
Learn More About The Sirdar Group 35
Expedition Partners 37
Resources and Bibliography 39
Table of Contents
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4
Carl BatesChief Executive of Sirdar Group
Executive Summary
Introduction
The Sirdar Group focuses on educating appointing and guiding high-performance boards across the African continent In our capacity as a trusted advisor to boards we have found a lack of empirical data to support the decision-making of privately-held companies and family businesses when it comes to fees performance and diversity in their boardrooms In 2018 we decided to fill this void and further contribute to improving board performance
In this second edition of the survey we analysed three key questions supporting improvement in board performance across Africa bull The perceived performance of these boards and obstacles they face according
to those who sit on thembull The structure and quantum of fees earned by non-executive and independent
directors (and) bull Board diversity with respect to gender ethnicity and the impact if any of board
diversity on the perceived performance of these boards
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5
Report highlights
The Sirdar Group report is filled with insights into the state of boardrooms in Africa Some of the highlights of this yearrsquos key findings include
bull Turnover and industry continue to be the main drivers of directorsrsquo fees
bull Not enough females are represented in the boardroom bull Female directors earn slightly more on average (6 percent) than
their male counterparts bull Racial diversity is on the increase however it still needs
significant attention bull Boards with independent directors outperform those which do
not bull Boards have an average of 58 members however independent
directors remain under-represented bull Boards have an average of four in-person meetings per year bull The majority of boards do not conduct formal board evaluationsbull Independent directors add value to boards 82 percent of
respondents who have independent directors reported that they would not remove any of this type of director from the board
bull Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director
bull Boards undertaking an evaluation at least once a year show an increase in EBITDA and stated their board was a high-performing one Those businesses that never conduct board evaluations or did so less than once per year did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
Now let us take a deeper look at the results and findings of Africarsquos Second Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses
Yours in boardroom performance
Carl BatesChief ExecutiveSirdar Group
Independent DirectorsAdd ValueExcept from Traversing the Avalanche by Carl Bates
Non-executive directors are not employees of the company and ldquoare not involved in the day-to-day management of the company Their role is to provide an objective perspective on the businesshellip [and] oversight on the key aspects of effective governance including strategic direction accountability for performance sustainability and conformancerdquo
Non-executive directors can either be independent or not independent The essential difference is ldquoindependent directors have no material investment or any relationship with the company that may influence decisions made A relationship includes being a customer supplier [a former employee] or advisorrdquo
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The research reinforced the value of independent directors on boards as demonstrated by the following key insight
Independent directors were considered toadd the most value to the boards surveyed
Respondents were asked which directors they would remove from the board because they are not adding value ndash for those with that type of director
Independent directors were the least likely to be removed only 18 percent of the directors surveyed said they would remove at least one independent director 82 percent would remove none In 2018 22 percent of respondents would remove an independent director
25 percent of respondents reported they would remove executive directors from the board for not adding value 46 percent would remove non-executive directors for the same reason (from 36 percent in 2018)
Boards with at least one independent director are outperforming boards without any independent directors Respondents were asked to self-evaluate their board against various key performance indicators (KPIs) These KPIs were selected to represent the activities of a high-performance board
The questions were framed as follows
To what extent do you agree with the following statementbull This board defines and approves clear financial and strategic
objectives for the executive team (quantitative and qualitative)Respondents were invited to select from the following answersbull Completely disagreebull Disagreebull Agreebull Completely disagree
Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director Only 36 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 78 percent for boards with at least one independent director ndash significantly higher than the 2018 findings In 2018 only 273 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 512 percent for boards with at least one independent director We also saw boards with independent directors were more likely to implement a performance evaluation process as strongly encouraged in most African governance codes such as King IV in South Africa
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
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10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
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11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
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12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
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13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
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14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
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15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
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16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
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17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
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What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
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When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
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Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
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Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
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Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
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conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
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The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Boards with at least
one independent director are outperforming
boards without one
Cape Town South Africa
2019-2020 copy Sirdar Group Cape Town South Africa
3
Executive Summary 4
Independent Directors Add Value 6
Non-Executive and Independent Directorsrsquo Fees 9
Diversity in the Boardroom 18
African Board Perspectives ndash A Deeper Look 21
Conclusion 26
Data and Sampling 28
Pre-register for 2020 33
Learn More About The Sirdar Group 35
Expedition Partners 37
Resources and Bibliography 39
Table of Contents
2019-2020 copy Sirdar Group Cape Town South Africa
4
Carl BatesChief Executive of Sirdar Group
Executive Summary
Introduction
The Sirdar Group focuses on educating appointing and guiding high-performance boards across the African continent In our capacity as a trusted advisor to boards we have found a lack of empirical data to support the decision-making of privately-held companies and family businesses when it comes to fees performance and diversity in their boardrooms In 2018 we decided to fill this void and further contribute to improving board performance
In this second edition of the survey we analysed three key questions supporting improvement in board performance across Africa bull The perceived performance of these boards and obstacles they face according
to those who sit on thembull The structure and quantum of fees earned by non-executive and independent
directors (and) bull Board diversity with respect to gender ethnicity and the impact if any of board
diversity on the perceived performance of these boards
2019-2020 copy Sirdar Group Cape Town South Africa
5
Report highlights
The Sirdar Group report is filled with insights into the state of boardrooms in Africa Some of the highlights of this yearrsquos key findings include
bull Turnover and industry continue to be the main drivers of directorsrsquo fees
bull Not enough females are represented in the boardroom bull Female directors earn slightly more on average (6 percent) than
their male counterparts bull Racial diversity is on the increase however it still needs
significant attention bull Boards with independent directors outperform those which do
not bull Boards have an average of 58 members however independent
directors remain under-represented bull Boards have an average of four in-person meetings per year bull The majority of boards do not conduct formal board evaluationsbull Independent directors add value to boards 82 percent of
respondents who have independent directors reported that they would not remove any of this type of director from the board
bull Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director
bull Boards undertaking an evaluation at least once a year show an increase in EBITDA and stated their board was a high-performing one Those businesses that never conduct board evaluations or did so less than once per year did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
Now let us take a deeper look at the results and findings of Africarsquos Second Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses
Yours in boardroom performance
Carl BatesChief ExecutiveSirdar Group
Independent DirectorsAdd ValueExcept from Traversing the Avalanche by Carl Bates
Non-executive directors are not employees of the company and ldquoare not involved in the day-to-day management of the company Their role is to provide an objective perspective on the businesshellip [and] oversight on the key aspects of effective governance including strategic direction accountability for performance sustainability and conformancerdquo
Non-executive directors can either be independent or not independent The essential difference is ldquoindependent directors have no material investment or any relationship with the company that may influence decisions made A relationship includes being a customer supplier [a former employee] or advisorrdquo
72019-2020 copy Sirdar Group Cape Town South Africa
The research reinforced the value of independent directors on boards as demonstrated by the following key insight
Independent directors were considered toadd the most value to the boards surveyed
Respondents were asked which directors they would remove from the board because they are not adding value ndash for those with that type of director
Independent directors were the least likely to be removed only 18 percent of the directors surveyed said they would remove at least one independent director 82 percent would remove none In 2018 22 percent of respondents would remove an independent director
25 percent of respondents reported they would remove executive directors from the board for not adding value 46 percent would remove non-executive directors for the same reason (from 36 percent in 2018)
Boards with at least one independent director are outperforming boards without any independent directors Respondents were asked to self-evaluate their board against various key performance indicators (KPIs) These KPIs were selected to represent the activities of a high-performance board
The questions were framed as follows
To what extent do you agree with the following statementbull This board defines and approves clear financial and strategic
objectives for the executive team (quantitative and qualitative)Respondents were invited to select from the following answersbull Completely disagreebull Disagreebull Agreebull Completely disagree
Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director Only 36 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 78 percent for boards with at least one independent director ndash significantly higher than the 2018 findings In 2018 only 273 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 512 percent for boards with at least one independent director We also saw boards with independent directors were more likely to implement a performance evaluation process as strongly encouraged in most African governance codes such as King IV in South Africa
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
3
Executive Summary 4
Independent Directors Add Value 6
Non-Executive and Independent Directorsrsquo Fees 9
Diversity in the Boardroom 18
African Board Perspectives ndash A Deeper Look 21
Conclusion 26
Data and Sampling 28
Pre-register for 2020 33
Learn More About The Sirdar Group 35
Expedition Partners 37
Resources and Bibliography 39
Table of Contents
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4
Carl BatesChief Executive of Sirdar Group
Executive Summary
Introduction
The Sirdar Group focuses on educating appointing and guiding high-performance boards across the African continent In our capacity as a trusted advisor to boards we have found a lack of empirical data to support the decision-making of privately-held companies and family businesses when it comes to fees performance and diversity in their boardrooms In 2018 we decided to fill this void and further contribute to improving board performance
In this second edition of the survey we analysed three key questions supporting improvement in board performance across Africa bull The perceived performance of these boards and obstacles they face according
to those who sit on thembull The structure and quantum of fees earned by non-executive and independent
directors (and) bull Board diversity with respect to gender ethnicity and the impact if any of board
diversity on the perceived performance of these boards
2019-2020 copy Sirdar Group Cape Town South Africa
5
Report highlights
The Sirdar Group report is filled with insights into the state of boardrooms in Africa Some of the highlights of this yearrsquos key findings include
bull Turnover and industry continue to be the main drivers of directorsrsquo fees
bull Not enough females are represented in the boardroom bull Female directors earn slightly more on average (6 percent) than
their male counterparts bull Racial diversity is on the increase however it still needs
significant attention bull Boards with independent directors outperform those which do
not bull Boards have an average of 58 members however independent
directors remain under-represented bull Boards have an average of four in-person meetings per year bull The majority of boards do not conduct formal board evaluationsbull Independent directors add value to boards 82 percent of
respondents who have independent directors reported that they would not remove any of this type of director from the board
bull Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director
bull Boards undertaking an evaluation at least once a year show an increase in EBITDA and stated their board was a high-performing one Those businesses that never conduct board evaluations or did so less than once per year did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
Now let us take a deeper look at the results and findings of Africarsquos Second Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses
Yours in boardroom performance
Carl BatesChief ExecutiveSirdar Group
Independent DirectorsAdd ValueExcept from Traversing the Avalanche by Carl Bates
Non-executive directors are not employees of the company and ldquoare not involved in the day-to-day management of the company Their role is to provide an objective perspective on the businesshellip [and] oversight on the key aspects of effective governance including strategic direction accountability for performance sustainability and conformancerdquo
Non-executive directors can either be independent or not independent The essential difference is ldquoindependent directors have no material investment or any relationship with the company that may influence decisions made A relationship includes being a customer supplier [a former employee] or advisorrdquo
72019-2020 copy Sirdar Group Cape Town South Africa
The research reinforced the value of independent directors on boards as demonstrated by the following key insight
Independent directors were considered toadd the most value to the boards surveyed
Respondents were asked which directors they would remove from the board because they are not adding value ndash for those with that type of director
Independent directors were the least likely to be removed only 18 percent of the directors surveyed said they would remove at least one independent director 82 percent would remove none In 2018 22 percent of respondents would remove an independent director
25 percent of respondents reported they would remove executive directors from the board for not adding value 46 percent would remove non-executive directors for the same reason (from 36 percent in 2018)
Boards with at least one independent director are outperforming boards without any independent directors Respondents were asked to self-evaluate their board against various key performance indicators (KPIs) These KPIs were selected to represent the activities of a high-performance board
The questions were framed as follows
To what extent do you agree with the following statementbull This board defines and approves clear financial and strategic
objectives for the executive team (quantitative and qualitative)Respondents were invited to select from the following answersbull Completely disagreebull Disagreebull Agreebull Completely disagree
Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director Only 36 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 78 percent for boards with at least one independent director ndash significantly higher than the 2018 findings In 2018 only 273 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 512 percent for boards with at least one independent director We also saw boards with independent directors were more likely to implement a performance evaluation process as strongly encouraged in most African governance codes such as King IV in South Africa
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
4
Carl BatesChief Executive of Sirdar Group
Executive Summary
Introduction
The Sirdar Group focuses on educating appointing and guiding high-performance boards across the African continent In our capacity as a trusted advisor to boards we have found a lack of empirical data to support the decision-making of privately-held companies and family businesses when it comes to fees performance and diversity in their boardrooms In 2018 we decided to fill this void and further contribute to improving board performance
In this second edition of the survey we analysed three key questions supporting improvement in board performance across Africa bull The perceived performance of these boards and obstacles they face according
to those who sit on thembull The structure and quantum of fees earned by non-executive and independent
directors (and) bull Board diversity with respect to gender ethnicity and the impact if any of board
diversity on the perceived performance of these boards
2019-2020 copy Sirdar Group Cape Town South Africa
5
Report highlights
The Sirdar Group report is filled with insights into the state of boardrooms in Africa Some of the highlights of this yearrsquos key findings include
bull Turnover and industry continue to be the main drivers of directorsrsquo fees
bull Not enough females are represented in the boardroom bull Female directors earn slightly more on average (6 percent) than
their male counterparts bull Racial diversity is on the increase however it still needs
significant attention bull Boards with independent directors outperform those which do
not bull Boards have an average of 58 members however independent
directors remain under-represented bull Boards have an average of four in-person meetings per year bull The majority of boards do not conduct formal board evaluationsbull Independent directors add value to boards 82 percent of
respondents who have independent directors reported that they would not remove any of this type of director from the board
bull Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director
bull Boards undertaking an evaluation at least once a year show an increase in EBITDA and stated their board was a high-performing one Those businesses that never conduct board evaluations or did so less than once per year did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
Now let us take a deeper look at the results and findings of Africarsquos Second Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses
Yours in boardroom performance
Carl BatesChief ExecutiveSirdar Group
Independent DirectorsAdd ValueExcept from Traversing the Avalanche by Carl Bates
Non-executive directors are not employees of the company and ldquoare not involved in the day-to-day management of the company Their role is to provide an objective perspective on the businesshellip [and] oversight on the key aspects of effective governance including strategic direction accountability for performance sustainability and conformancerdquo
Non-executive directors can either be independent or not independent The essential difference is ldquoindependent directors have no material investment or any relationship with the company that may influence decisions made A relationship includes being a customer supplier [a former employee] or advisorrdquo
72019-2020 copy Sirdar Group Cape Town South Africa
The research reinforced the value of independent directors on boards as demonstrated by the following key insight
Independent directors were considered toadd the most value to the boards surveyed
Respondents were asked which directors they would remove from the board because they are not adding value ndash for those with that type of director
Independent directors were the least likely to be removed only 18 percent of the directors surveyed said they would remove at least one independent director 82 percent would remove none In 2018 22 percent of respondents would remove an independent director
25 percent of respondents reported they would remove executive directors from the board for not adding value 46 percent would remove non-executive directors for the same reason (from 36 percent in 2018)
Boards with at least one independent director are outperforming boards without any independent directors Respondents were asked to self-evaluate their board against various key performance indicators (KPIs) These KPIs were selected to represent the activities of a high-performance board
The questions were framed as follows
To what extent do you agree with the following statementbull This board defines and approves clear financial and strategic
objectives for the executive team (quantitative and qualitative)Respondents were invited to select from the following answersbull Completely disagreebull Disagreebull Agreebull Completely disagree
Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director Only 36 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 78 percent for boards with at least one independent director ndash significantly higher than the 2018 findings In 2018 only 273 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 512 percent for boards with at least one independent director We also saw boards with independent directors were more likely to implement a performance evaluation process as strongly encouraged in most African governance codes such as King IV in South Africa
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
5
Report highlights
The Sirdar Group report is filled with insights into the state of boardrooms in Africa Some of the highlights of this yearrsquos key findings include
bull Turnover and industry continue to be the main drivers of directorsrsquo fees
bull Not enough females are represented in the boardroom bull Female directors earn slightly more on average (6 percent) than
their male counterparts bull Racial diversity is on the increase however it still needs
significant attention bull Boards with independent directors outperform those which do
not bull Boards have an average of 58 members however independent
directors remain under-represented bull Boards have an average of four in-person meetings per year bull The majority of boards do not conduct formal board evaluationsbull Independent directors add value to boards 82 percent of
respondents who have independent directors reported that they would not remove any of this type of director from the board
bull Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director
bull Boards undertaking an evaluation at least once a year show an increase in EBITDA and stated their board was a high-performing one Those businesses that never conduct board evaluations or did so less than once per year did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
Now let us take a deeper look at the results and findings of Africarsquos Second Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses
Yours in boardroom performance
Carl BatesChief ExecutiveSirdar Group
Independent DirectorsAdd ValueExcept from Traversing the Avalanche by Carl Bates
Non-executive directors are not employees of the company and ldquoare not involved in the day-to-day management of the company Their role is to provide an objective perspective on the businesshellip [and] oversight on the key aspects of effective governance including strategic direction accountability for performance sustainability and conformancerdquo
Non-executive directors can either be independent or not independent The essential difference is ldquoindependent directors have no material investment or any relationship with the company that may influence decisions made A relationship includes being a customer supplier [a former employee] or advisorrdquo
72019-2020 copy Sirdar Group Cape Town South Africa
The research reinforced the value of independent directors on boards as demonstrated by the following key insight
Independent directors were considered toadd the most value to the boards surveyed
Respondents were asked which directors they would remove from the board because they are not adding value ndash for those with that type of director
Independent directors were the least likely to be removed only 18 percent of the directors surveyed said they would remove at least one independent director 82 percent would remove none In 2018 22 percent of respondents would remove an independent director
25 percent of respondents reported they would remove executive directors from the board for not adding value 46 percent would remove non-executive directors for the same reason (from 36 percent in 2018)
Boards with at least one independent director are outperforming boards without any independent directors Respondents were asked to self-evaluate their board against various key performance indicators (KPIs) These KPIs were selected to represent the activities of a high-performance board
The questions were framed as follows
To what extent do you agree with the following statementbull This board defines and approves clear financial and strategic
objectives for the executive team (quantitative and qualitative)Respondents were invited to select from the following answersbull Completely disagreebull Disagreebull Agreebull Completely disagree
Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director Only 36 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 78 percent for boards with at least one independent director ndash significantly higher than the 2018 findings In 2018 only 273 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 512 percent for boards with at least one independent director We also saw boards with independent directors were more likely to implement a performance evaluation process as strongly encouraged in most African governance codes such as King IV in South Africa
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Independent DirectorsAdd ValueExcept from Traversing the Avalanche by Carl Bates
Non-executive directors are not employees of the company and ldquoare not involved in the day-to-day management of the company Their role is to provide an objective perspective on the businesshellip [and] oversight on the key aspects of effective governance including strategic direction accountability for performance sustainability and conformancerdquo
Non-executive directors can either be independent or not independent The essential difference is ldquoindependent directors have no material investment or any relationship with the company that may influence decisions made A relationship includes being a customer supplier [a former employee] or advisorrdquo
72019-2020 copy Sirdar Group Cape Town South Africa
The research reinforced the value of independent directors on boards as demonstrated by the following key insight
Independent directors were considered toadd the most value to the boards surveyed
Respondents were asked which directors they would remove from the board because they are not adding value ndash for those with that type of director
Independent directors were the least likely to be removed only 18 percent of the directors surveyed said they would remove at least one independent director 82 percent would remove none In 2018 22 percent of respondents would remove an independent director
25 percent of respondents reported they would remove executive directors from the board for not adding value 46 percent would remove non-executive directors for the same reason (from 36 percent in 2018)
Boards with at least one independent director are outperforming boards without any independent directors Respondents were asked to self-evaluate their board against various key performance indicators (KPIs) These KPIs were selected to represent the activities of a high-performance board
The questions were framed as follows
To what extent do you agree with the following statementbull This board defines and approves clear financial and strategic
objectives for the executive team (quantitative and qualitative)Respondents were invited to select from the following answersbull Completely disagreebull Disagreebull Agreebull Completely disagree
Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director Only 36 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 78 percent for boards with at least one independent director ndash significantly higher than the 2018 findings In 2018 only 273 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 512 percent for boards with at least one independent director We also saw boards with independent directors were more likely to implement a performance evaluation process as strongly encouraged in most African governance codes such as King IV in South Africa
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
72019-2020 copy Sirdar Group Cape Town South Africa
The research reinforced the value of independent directors on boards as demonstrated by the following key insight
Independent directors were considered toadd the most value to the boards surveyed
Respondents were asked which directors they would remove from the board because they are not adding value ndash for those with that type of director
Independent directors were the least likely to be removed only 18 percent of the directors surveyed said they would remove at least one independent director 82 percent would remove none In 2018 22 percent of respondents would remove an independent director
25 percent of respondents reported they would remove executive directors from the board for not adding value 46 percent would remove non-executive directors for the same reason (from 36 percent in 2018)
Boards with at least one independent director are outperforming boards without any independent directors Respondents were asked to self-evaluate their board against various key performance indicators (KPIs) These KPIs were selected to represent the activities of a high-performance board
The questions were framed as follows
To what extent do you agree with the following statementbull This board defines and approves clear financial and strategic
objectives for the executive team (quantitative and qualitative)Respondents were invited to select from the following answersbull Completely disagreebull Disagreebull Agreebull Completely disagree
Boards without independent directors evaluated themselves poorly compared to boards with at least one independent director Only 36 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 78 percent for boards with at least one independent director ndash significantly higher than the 2018 findings In 2018 only 273 percent of the boards without any independent directors were satisfied with the impact of their board on company performance compared to 512 percent for boards with at least one independent director We also saw boards with independent directors were more likely to implement a performance evaluation process as strongly encouraged in most African governance codes such as King IV in South Africa
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
82019-2020 copy Sirdar Group Cape Town South AfricaKilimanjaro Tanzania
Boards without independent directors
are less likely to report an increase of EBIDTA
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Non-Executive and Independent Directorsrsquo FeesClear and transparent remuneration policies have become a growing concern for boards in recent years due to heavy shareholder and media scrutiny Privately-held and family businesses struggle to determine a reference point for the amount their non-executive directors should earn In this section directorsrsquo fees are analysed according to three perspectivesbull The main drivers of the fee levelsbull The equity component of fees andbull The average fees according to the sector
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
10
Directorsrsquo remunerations have been the subject of extensive conceptualisation and empirical research over many years Internationally this research has typically dealt with European and American-based companies Alternatively and particularly in Africa it has focused on listed companies and public entities This has left a knowledge-gap regarding non-listed African board practices particularly relating to privately-held companies and family businesses board fees These firms have few guidelines to assist in building a high-performing board and assess their directorsrsquo rightful compensations
This data has been collected in the currency chosen by the respondents and was mostly in the currency the company uses as its main currency of operation Fees were converted into US dollars at the exchange rate for comparison purposes and it is recommended this become the starting point for local comparisons
Due diligence was taken by Sirdar Group in excluding respondents who reported they did not receive non-executive or independent director fees This accounted for 28 percent of the data set
The survey evidenced a huge diversity in fees reflecting the company diversity participation in terms of industry size country gender and company ownership type
What drives board fees
While this survey provides insight into non-executive and independent director fees a company should always seek appropriate professional advice when determining the specific fees relating to their companyrsquos circumstances
The level and structure of fees for non-executive directors are principally driven by enterprise size International reports reference industry segmentation taking into account the complexity of the operations business risks and challenges and market factors Director-specific factors like the scarcity of qualified non-executive directors qualifications and experience also play a role in the final fee-setting process Within a board the main distinction between fees relates to workload the chairmanrsquos role verses other directors and recognising committee involvement in addition to the standard board process
What is being paid
25 percent of the non-executive directors are paid less than US$4 000 annually compared with 29 percent being paid between US$4 000 and US$7 999 A further 18 percent are being paid between US$8 000 and US$14 999 and the balance (28 percent) are being paid more than US$15 000 However extreme data is driving this spread When the top and bottom 10 percent are excluded the data shows annual payments between US$1 800 and US$48 000 The average across all businesses
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
11
and industries for non-executive and independent directors surveyed is US$14 074 with a median of US$8 230
The 2018 results showed a quarter of the non-executive directors were paid less than US$3 716 annually (slightly lower than the 29 percent for 2019) compared with 50 percent being paid more than US$8 000 and the balance more than US$14 000
The main but not sole driver of directorsrsquo fees appears to be annual turnover Other factors include location company size age and gender of respondent and industry classification
Director fees by country (average)
The average annual fee paid to non-executive and independent directors ranges across all African territories surveyed is US$14 074 The following is the regional representation (percentage of respondents per region)
Director fees on average were higher for East African countries (Kenya and Mauritius) followed by West African countries (Ghana and Nigeria) Southern Africa (South Africa Namibia and Zambia) had the lowest director fees
0 10 3020 5040 60
PERCENTAGE oF RESPoNDENTS PER REGIoN
Percentage
East Africa 17
West Africa 28
Table of African countries by territory
East Africa
Southern Africa
West Africa
Kenya Mauritius
South Africa Namibia Zambia
Ghana Nigeria
1 00000 6 00000 16 0000011 00000 21 00000 26 00000
DIRECToR FEES By CouNTRy (AVERAGE)
West Africa $14 710
Southern Africa $10 391
East Africa $24 983
Southern Africa 55
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
12
Directors fees by company size
Companies of over 5000 people pay the highest director fees according to this yearrsquos results This figure drops steadily for smaller businesses with the exception of businesses with less than 20 employees which shows higher fees than businesses with up to 500 employees Lowest fees are paid to directors of businesses with between 21 and 50 employees
0 10 000 20 000 30 000 40 000 50 000
DIRECToRS FEES By CoMPANy SIzE
5001 or more $45 009
501 - 1000 $26 364
51 - 100 $8 886
2001 - 5000 $36 000
201- 500 $17 362
21 - 50 $4 304
1001 - 2000 $13 004
101 - 200 $12 362
Less than 20 $20 217
Directors fees
Com
pany
size
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
13
Director fees by gender
Findings from our 2019 study reveal females earn slightly more (6 percent) than their male counterparts when it comes to non-executive and independent director fees The average fees for females was US$14 616 against US$13 765 for males
MaleFemale
$14 616
$13 765
6
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
14
Company turnover is the largest driver
of directorsrsquo fees in Africa
Addis Ababa Ethiopia
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
15
Non-executive and independent director fees on average are highest for companies with the highest turnover and lowest when the company turnover is lower
- 5 000 10 000 25 00015 000 20 000 30 000 35 000 40 000
Directors fees
0 - 10 million $10 692
21 - 40 million $19 944
81 - 100 million $18 518
11 - 20 million $24 695
41 - 60 million $29 258
100+ million $36 000
Turn
ove
rNon-executive and independent director fees against turnover
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
16
Industries paying the highest directorsrsquo fees include manufacturing of basic metals metal mining and quarrying other administrative activities and other (not listed)
Non-executive and independent director fees against industry
0 45 00040 00035 00030 00025 00020 00015 00010 0005 000
Manufacturing of basic metals $39 011
Other administrative activities $22 318
Metal mining and quarrying $31 209
Director fees
Indust
ryFishing $2 340
Construction $12 028
Extraction of crude $5 486
Education $7 184
Veterinary activities $3 185
Real estate $6 501
Crop and animal production $8 287
Human health $2 639
Transportation $17 560
Legal and accounting $18 118
Other manufacturing $6 350
Accommodation and food services $7 600
Wholesale and retail $5 078
Financial $18 889
Architectural and engineering activities $6 501
Waste collection $11 502
Other $21 549
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
17
Fee increases
We asked respondents approximately how much the total fees received by non-executive directors andor independent directors had increased against the previous year 37 percent reported the fees remained the same and 18 percent did not know A collective 37 percent saw an increase and eight percent a decrease in fees
Non-executive and independent director fees equity and supplementary remuneration
We asked respondents if non-executive and independent directors received any equity in addition to the cash component and whether they could earn any supplementary remuneration
0 105 2015 25 30 35 40
Percentage
FEE INCREASES
Decrease between 11 and 20 1
Increase of more than 20 5
Decrease of more than 20 3
Increase between 6 and 10 16
Decrease between 6 and 10 1
Increase between 1 and 5 15
Decrease between 1 and 5 3
I do not know 18
Remainedthe same 37
Fee incr
ease
s
They had this to say bull 92 percent said directors did not receive equity or if they
did independent directors did not bull 496 percent said they did not receive any supplementary
remuneration to the fixed cash component and 504 percent said they did (in the form of attendance fees for meetings committee membership fees and other reimbursements or benefits)
bull 23 percent said they receive an attendance fee per in-person meeting
bull Five percent said they receive an attendance fee per teleconference
bull Nine percent said they receive committee membership fees
bull 10 percent said they receive other reimbursements or benefits (commission travel accommodation bonuses)
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Diversity in the BoardroomAccording to the King IV Report on Corporate Governance the recommended practices the governing body should perform include promoting diversity in its board membership (age culture race gender and fields of expertise) and setting targets for race and gender representation in its composition With regards to nomination election and member appointment of this governing body the board should consider the collective attributes and diversity needed as well as whether the candidate is lsquofit and properrsquo prior to potential member nomination
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
192019-2020 copy Sirdar Group Cape Town South Africa
What is considered a lsquodiversersquo board
A diverse boardroom is one not homogenous (one that does not have a single type of member when it comes to race and gender) Diverse boardrooms have a mix of ethnic origins and cater to all genders and are how the best boardroom decisions are made According to Deloittersquos Diversity in the Boardroom Perspectives and Practices report a principal argument in favour of diverse boards is the wide range of perspectives each individual brings to the boardroom table Their paper notes a diverse board better understands its customer base and the environment in which the business operates They argue having a wide range of perspectives in the room also means the status quo is constantly challenged and critically reassessed guarding against the notorious lsquogroup thinkrsquo
Are African boards considered diverse
Findings from our 2019 research suggest African boards still lag when it comes to gender diversity We found of the companies assessed 305 percent had no female board members in 2019
In 2018 the research found 279 percent of boards did not have any female directors while they only represented 218 percent of the total board compositions
Interestingly businesses indicating they had two or more female board members also reported a higher instance of performance in terms of the boardrsquos impact on the company Boards with female members were considered generally more effective and had a 5-10 percent increase in EBITDA over the previous year while businesses with no female board members reported their boards were either not effective or could be more effective
74
26
GENDER SPLIT
MaleFemale
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
202019-2020 copy Sirdar Group Cape Town South Africa
When it comes to diversity of ethnic origins we found 44 percent of boards only have one ethnic origin represented in the boardroom Less than 12 percent are represented by fully diversified boards
0 5 10 2015 3025 4035 45
Percentage
DIVERSITy oF EThNIC oRIGINS
4 ethnicities 8
2 ethnicities 33
3 ethnicities 15
1 ethnicity 44Eth
nic
ori
gin
While we are seeing an increasing trend when it comes to ethnic origins represented in the boardroom businesses need to focus on creating more diverse boards to make better decisions
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
African Board Practices ndash A Deeper LookIn this section we explore the African boards from a size composition and experience perspective while discussing board meetings board evaluations and board effectiveness
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
222019-2020 copy Sirdar Group Cape Town South Africa
Board size
In our previous report we stated there is no perfect board size but there are some best practices boards can observe to make their board perform better In truth the most appropriate board size is linked to the company size and structure as well as the depth and issue complexities facing the business
According to Segalrsquos 2019 article Evaluating the Board of Directors there is no universal agreement on the optimum size of a board of directors A large number represents a challenge in terms of using them effectively andor having any meaningful individual participation It is however generally accepted a board with less than eight members can make better decisions not to mention the less onerous recruitment process and lower board management costs (Governance Today 2019) This year we found the average number of board members sitting on African boards was 58
Number of board positions held
Each respondent was asked how many board positions they held 28 percent hold two positions 21 percent sit on one or three boards 16 percent hold four board positions eight percent sit on five boards and five percent have six or more board positions
0 5 10 2515 20 30
Percentage
NuMBER oF BoARD PoSITIoNS hELD
6 positions 1
5 positions 8
1 position 21
7+ positions 4
3 positions 21
4 positions 16
2 positions 28
Num
ber
of
posi
tions
held
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
232019-2020 copy Sirdar Group Cape Town South Africa
Board composition
As shown in the graph below the average number of executive directors on a board is 24 (44 percent of the boardrsquos composition) the average number of non-executive directors is 21 (36 percent) and the average number of independent directors is 12 (20 percent) This has changed significantly for the former and latter from 2018 where the percentage of executive directors was 371 percent and independent directors 282 percent The percentage of non-executive directors remained stable It is difficult to draw a direct conclusion from this other than to have it as a reference point In 2020 we will be looking to significantly increase the number of participants in the data set to draw larger conclusions
Board meetings
At The Sirdar Group we believe board meetings should be held regularly (at least every second month) These meetings are held to conduct essential health checks on the business and its profitability To that end itrsquos not only vital these meetings happen regularly but that all directors attend
Sonnenfeld (2002) noted in the Harvard Business Review regular meeting attendance is considered a hallmark of the conscientious director yet still some big names on the boards barely show up due to other commitments and when they show theyrsquore not prepared Itrsquos vital for all members to attend these regular meetings
For the second consecutive year The Sirdar Grouprsquos anecdotal evidence shows there is trend between board performance and regular meetings for privately-held companies and family businesses in particular meeting monthly or six times a year Annually the boards surveyed held between one and 10 face-to-face or teleconferencing meetings Face-to-face meetings on average were held 41 times per year and 14 teleconferences during the year In 2018 these were 46 and 33 average meetings respectively This is a large shift from the 2018 data set and we shall look to increase the number of respondents for 2020 to understand this phenomenon
The numbers
Total board size (average)
58
6
year
2019
2018
Average executive directors
24(44 percent)
23(37 percent)
Average non-executive directors
21(36 percent)
21(34 percent)
Average independent directors
12(20 percent)
17(28 percent)
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
242019-2020 copy Sirdar Group Cape Town South Africa
Board evaluations
So the question becomes Is your board performing well and how do you know it is The surest way to find out is to conduct a formal board evaluation but are businesses doing this
According to this yearrsquos data 11 percent of boards conduct formal evaluations less than once a year 38 percent do so every year four percent do so more than once per year three percent are unsure of how often they evaluate their boards and most startlingly a majority of 44 percent never evaluate their board
Of these results we also found every board where formal evaluations are conducted less than once a year only do so through an internal review with no outside expertise Only 62 percent of these businesses are satisfied by these evaluations and 38 percent find themselves unsatisfied
For businesses conducting these reviews once per year 42 percent of the reviews are conducted by an external party and 58 percent
The numbers
The average number of in-person meetings held each year
41The average number of
teleconferences held each year
14
Segal 2019
ldquoYou can learn a lot from looking at the disclosures made about a companyrsquos boardof directors in its annual report but it takes time and knowledge to pick up clues on the level of quality of a companyrsquos governance
as reflected in its boardrsquos compositionand responsibilitiesrdquo
how often does the company conduct a formal evaluation of the boardrsquos performance
Less than once a year
Once a year
More than once a year
Never
Unknown
Percent
11 percent
38 percent
4 percent
44 percent
3 percent
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
252019-2020 copy Sirdar Group Cape Town South Africa
conducted internally There is a 100 percent satisfaction level with board evaluations conducted by external parties while when evaluations are conducted internally 88 percent of board members were satisfied and 12 percent unsatisfied
Businesses conducting these reviews more than once per year were 100 percent satisfied with the evaluations and the evaluations were wholly conducted internally
The most important finding to these results is the majority of businesses conducting reviews once a year or more showed an increase in EBITDA compared to the previous year and reported feeling their board was a high-performing one Those businesses never conducting board evaluations or doing so less than once per year and were unsatisfied with board evaluations did not agree their board was a high-performing one and the majority reported a decrease in EBITDA
We strongly advise businesses conduct at least annual board evaluations to stay ahead stay relevant and improve board performance
Board tenure
Of the respondents whose boards have non-executive and independent directors it is interesting to note 23 percent have served on a board for only one year 19 percent have served for six to 10 years and 12 percent have served on a board for three years The remaining 46 percent were spread across a wide range of tenure
25100 5 2015
Percentage
BoARD TENuRE
Twenty-one years or more 2
Two years 11
Eleven tofourteen years 6
Three years 12
Fifteen totwenty years 6
Five years 12
Four years 10
Six to ten years 19
One year 23
Num
ber
of
years
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
ConclusionThe Sirdar Group survey aims to support improving board performance by understanding director fees performance and diversity on the continent We believe this has been achieved The results will support boards and directors across the continent make better decisions in relation to these three aspects of a high performance board Findings from our 2019 survey point to three core concerns when it comes to non-executive and independent directors for privately-held companies and family businesses
1 Boards which do not have independent directors do not perform as well as those which are represented by independent directors
2 Diversity in the boardroom is still lagging and female members of the board continue to be under-represented
3 Boards are not conducting formal evaluations of performance often enough Those which do conduct frequent evaluations enjoy higher EBITDA and report increased board performance
Nairobi Kenya
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
272019-2020 copy Sirdar Group Cape Town South Africa
Remuneration policies for non-executive and independent directors have come under the media spotlight and will continue to do so into the foreseeable future We know they need to be clear and transparent as well as equitable and taking into account the time and investment directors bring to boards We trust the insight provided by this survey supports you to ensure this is the case in a privately-held company and family business context
Equally important is diversity among board members to ensure viewpoints and expectations can reflect the broader society in which companies work While this yearrsquos survey did not address this aspect to the degree we would have hoped your support for the 2020 survey will support the continuation of this initial work into better understanding directorship on the African continent
The results of Africarsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Private and Family-owned Businesses survey The Sirdar Grouprsquos second annual survey into this field can now provide a basis for comparison and assist companies further contribute to economic growth and development across Africa
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Data and Sampling The data in this report was collected via an online survey between April and September 2019 The survey was designed for completion by executive and non-executive directors currently serving on the board of an African privately-held or family business
Incomplete inaccurate irrelevant (public companies) or unverifiable (no company name or email address provided) responses were excluded of the 337 total responses collected 188 were used for analysis (56 percent of responses were usable)
The 188 responses represented 144 companies in 15 African countries ndash Kenya Mauritius Namibia South Africa zambia Ghana and Nigeria 82 percent of these companies are privately-held and 18 percent family businesses
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
292019-2020 copy Sirdar Group Cape Town South Africa
The 2019 usable data represents companies with a collective US$36 billion in turnover and an average of US$18 million in annual turnover Seven companies reported sales of US$50 million or above
In terms of company size 64 percent of surveyed companies have 100 employees or less 31 percent between 101 and 1000 employees and five percent more than 1000 employees
In 2018 we had 162 respondents representing 139 companies from 12 countries - South Africa Kenya
Mauritius Zimbabwe Ghana Nigeria Zambia Tanzania Algeria Cameroon Mozambique and Uganda ndash and 67
percent of the respondents were privately-held companies and 33
percent family businesses
Respondent demographics gender
The gender split among respondents was 74 percent male and 26 percent female
GENDER SPLIT
74
26
MaleFemale
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
302019-2020 copy Sirdar Group Cape Town South Africa
Respondent demographics age
A collective 39 percent of respondents who indicated they were non-executive or independent directors are between 40 and 49 years old 16 percent are between 55 and 59 12 percent between 60 and 64 and 10 percent between 50 and 54 years Directors less than 40 years old accounted for 17 percent of responses and directors above 65 years old accounted for seven percent of responses
Respondent business ownership structure
The Sirdar Group survey seeks to assess only family-owned and privately-held businesses Of the valid responses to the survey 18 percent of businesses are family-owned businesses and 82 percent are privately-held businesses
0 5 10 15 20
RESPoNDENT DEMoGRAPhICS By AGE
Percentage
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
5
2
12
16
10
19
19
12
5
Age r
anges
in y
ears
Family business
Privately-held
82
18
BuSINESS oWNERShIP STRuCTuRE
Privately-held companies Privately-held companies accounted for 82 percent of the total data set with 37 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 24 percent being private companies with a diversity of shareholders
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
312019-2020 copy Sirdar Group Cape Town South Africa
Family businesses Family businesses accounted for 18 percent of the total data set 58 percent of them as shareholder-managed companies (small group of shareholders holding a majority) and 17 percent being a private company with a diversity of shareholders
Respondent business industry classification
15 percent of respondent businesses were categorised as ldquootherrdquo or in an industry not listed closely followed by 13 percent ldquofinancial servicesrdquo 12 percent as ldquoother manufacturingrdquo and seven percent ldquolegal and accountingrdquo Including ldquootherrdquo we offered 23 industry classifications from which to select
0 2 4 6 8 10 12 14 16
Percentage
INDuSTRy CLASSIFICATIoN
Wholesale and retail
Other
Repair and installation
Information and communication
Extraction of crude
Veterinary activities
Manufacturing of basic metals
Other manufacturing
Fishing
Education
Architectural and engineering activities
Waste collection
Metal mining and quarrying
Real estate
Human health
Electricity
Construction
Transportation
Legal and accounting
Other administrative activities
Financial
Crop and animal production
Accomomodation and food services
Indust
ry
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
322019-2020 copy Sirdar Group Cape Town South Africa
Respondent business industry classification(by ownership type)
The following graph represents the industries listed above but separated by the ownership type privately-held or family businesses In most instances participant business industries indicated they were privately-held businesses
The rest of this report outlines the rich data provided by the research with a view to explore African boards of directors their fees boardroom diversity and perceived board performance
0 2 4 6 8 10 12 14 16
PercentageFamily businessPrivately-held company
INDuSTRy By oWNERShIP TyPE
Indust
ry
Other 213
Waste collection 2
Legal and accounting 25
Construction 3 1
Other manufacturing 210
Human health 15
Transportation 3 1
Financial 113
Veterinary activities 1
Fishing 1
Architectural and engineering activities 1
Real estate 1 1
Accomomodation and food services 1 1
Metal mining and quarrying 1 1
Wholesale and retail 15
1 1Manufacturing of basic metals
Education 4
1Electricity
Other administrative activities 7
1Repair and installation
Crop and animal production 13
1Information and communication
Extraction of crude 2 1
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
332019-2020 copy Sirdar Group Cape Town South Africa
Pre-register for 2020The research you just read is the second edition of The Sirdar Grouprsquos Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held Companies and Family Businesses annual report
These reports translate into a significant amount of data and insight for African directors and will continue to do so over time enabling The Sirdar Group to substantially support the development of companies on the continent and provide the platform from which boards can reference their performance and fees
In building this reference participation from more African boards is critical If you want insight into what African independent directors are being paid and understand how you can align your directorsrsquo fees to best practice preregister for the 2020 survey by clicking on the link below
It is estimated 775 percent of the people reading this document will preregister for next yearrsquos survey We thank you in advance for being one of them
Click to Pre-register for 2020
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
We are Africarsquos leader
in boardroom performance
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
352019-2020 copy Sirdar Group Cape Town South Africa
Learn more aboutThe Sirdar Group Sirdar is the name given to the lead Sherpa on a mountain expedition Where others view a high mountain as a great challenge or an insurmountable obstacle the sirdar sees it as a clear path of opportunity The sirdar builds the right team chooses the correct route and knows when to go for the summit At The Sirdar Group this strategy is applied in walking with companies on their journey to success
Meaningful Economic Impact
This serves as the promise against which we measure our behaviour and decisions It is underpinned by the understanding that effective boards grow companies These companies become more sustainable with less risk and better returns Stronger companies support a stronger economy Stronger economies can do more for their people
When the economy is flourishing and there is measurable reliable growth quality of life has the opportunity to improve on a national scale It makes both the lives of the people and the world a better and more meaningful place Facilitating long-term economic impact makes a meaningful impact on everyday people
The Sirdar Group delivers on its promise by providing three key services to the boards of privately-held companies and family businesses
Educate Appoint Guide
The first step in creating sustainable businesses is sharing the importance of the role of a board in a business
Boards are often incorrectly thought of firstly as a practice reserved for big businesses and corporates and secondly as a group whose key role is to ensure compliance In reality a board of directors is a critical business tool for privately-held companies and family businesses In so doing they improve performance increase company value and deliver a return to shareholders and other stakeholders
The Sirdar Group therefore drives awareness about boards and in-depth and practical education surrounding their importance and how they function
The second step is appointing a high-performance board
Often the success of the board is seen as a function of the names who sit on it While critical to board success it is only one part of the three key areas comprising the foundation and sustaining of a high-performance board ndash people methodology and process The Sirdar Group ensures the foundation of the board through the selection of the right directors for the specific circumstances occurs Through
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
362019-2020 copy Sirdar Group Cape Town South Africa
understanding an individualrsquos commercial astuteness to testing their natural energy and ensuring their governance knowledge The Sirdar Group makes sure the right people are appointed to the team
And the third value-adding step is guiding the board on its journey of success and growth
To complete the picture The Sirdar Grouprsquos unique methodology to create and sustain high-performance boards blends best practice thinking holistic governance models the practical application of governance principles the provision and performance management of independent non-executive directors and a team to guide the board This delivers real value to the companies with which we are involved and we see an immediate positive impact as well as an increase in sustained profitability and value in the businesses in which we work It is how we deliver impactful and meaningful economic growth
Firdows Thebus Head of Educate
Carl Bates Chief Executive
Roger hitchcock Senior Partner
Tim holmes Senior Partner
Kieron McRae Head of Guide
Farah Esmail Head of Sirdar Kenya
Catherine Engmann Head of Sirdar Ghana
Beverley hancock Head of Appoint
Anthony Swart Head of Growth
Jenny Scheffers Marketing Specialist
The Sirdar Team
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Expedition PartnersThe Sirdar Group wishes to thank the following expedition partners who supported and promoted this survey in 2019 Without your support the survey would not have achieved the reach it did Thank you
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
2019-2020 copy Sirdar Group Cape Town South Africa
38
Institute of Directors Mozambiquewwwiodmzcom
Institute of Directors Nigeriawwwiodnigeriaorg
Cape Chamber ofCommerce and Industrywwwcapechambercoza
Family Business Association ofSouthern Africa (FABASA)
wwwfabasacozaLeading Women of Africa
wwwleadingwomenofafricacomJack hammer
wwwjhammercoza
Contribution Compasswwwcontributioncompasscom
young Presidentsrsquo organization Lagoswwwypoorg
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Resources and Bibliography
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
402019-2020 copy Sirdar Group Cape Town South Africa
Bizcommunity 2019 Lack of diversity The elephant in the boardroomAccessed httpswwwbizcommunitycom Article196820190351html
Barlow J 2016 Best Practices for Board Evaluations Accessed httpswwwboardeffectcomblogbest-practices-for-board-evaluations
Deloitte 2019 Diversity in the Boardroom Perspectives and practicesAccessed httpswww2deloittecomcontentdamDeloittezaDocumentsgovernance-risk-complianceZA_Board_Diversity_Full_ArticlePDF
Governance Today 2019 What is the optimum Board size Accessed httpswwwgovernancetodaycomGTArticlesWhat_is_the_optimum_Board_sizeaspx
KPMG 2016 King IV Summary Guide Accessed httpsassetskpmgcontentdamkpmgzapdf201611King-IV-Summary-Guidepdf
Segal T 2020 Evaluating the Board of Directors Investopedia Accessed httpswwwinvestopediacomarticlesanalyst03111903asp
Sonnenfeld J 2002 What Makes Great Boards Great Harvard Business ReviewAccessed httpshbrorg200209what-makes-great-boards-great
The Boardroom Africa 2019 The Boardroom Africa releases latest research on boardroom gender diversity in AfricaAccessed httpsmediumcomaccelerating-gender-diversity-in-the-boardroomwomenonboard2019-2407b8dd1c61
The Sirdar Group 2018 Africarsquos First Non-Executive and Independent Directorsrsquo Fees Performance and Diversity Survey for Privately-held and Family Businesses Accessed httpssirdargroupcomwp-contentuploads201810sirdarsurveyreportpdf
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online
Contact us today
Cape Town - South Africa
13 Bell CrescentWestlake Business ParkCape Town 7945
+27 21 276 0540
southafricasirdargroupcom
Accra - Ghana
1 Watson Avenue Adabraka Accra 23321 Ghana
+233 302 201 579
ghanasirdargroupcom
Johannesburg - South Africa
The Woodlands Office Park 2nd Floor Building 13Woodmead Sandton
+27 21 276 0540
southafricasirdargroupcom
Wellington - New zealand
PO Box 23-100WellingtonNew Zealand
+64 21 242 9383
globalsirdargroupcom
Nairobi - Kenya
1st Floor Rivaan Centre Muguga GreenNairobi
+254 728 202 681
kenyasirdargroupcom
Connect with us online