The fallout from the Financial Services Royal Commission reinforces the need for investors to assess boards when buying stocks. Boards that allow poor organisation cultures to form, are too influenced by executives or asleep on risk management, destroy wealth.
Consider AMP. Former chair, Catherine Brenner, resigned after damning evidence of misconduct by AMP staff emerged at the Royal Commission. Three other directors announced this week they will leave the board in 2018.
AMP’s debacle again highlights how the market overlooks boards in company assessment. For all the tough talk, through institutional investors voting on executive pay and director appointments, underperforming boards are tolerated for too long.