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2 Responses
I understood that the NZSA’s policy was to encourage Directors to own shares in the company on whose Board they sit. It does not see compulsory share ownership as necessary but it is not against companies having policies requiring their directors to own shares. I always look for Directors share ownership and where it is very low or when adirector owns no shares I always wonder why.
We encourage share ownership by Directors. Compulsion is a double-edged sword: it increases skin in the game, but can mean that otherwise good directors may not be able to afford to be Directors. So where compulsion exists, we look for a mitigation (such as an ‘exemption’ from the Chair, or a gradual purchase rate). Wealth is no arbiter of quality. We also note that it compulsion can make it difficult to unpick the ‘market signal’ from the transaction –> are they bying shares because they want to? Or becuase they have to?