NZSA Policy Statements

Independent Directors Share Ownership

1.0 Commentary

1.1  There is a wide range of opinion around Independent Directors owning shares from their holding no shares in order to preserve their independence and not be influenced by their financial stake in the company, to Directors owning shares based on their Fees.

1.2  Some companies require Independent Directors to utilise part of their fees to purchase shares each year on the basis that this gives them “skin in the game” and aligns their interests with shareholders.

1.3  In addition, with younger Directors being appointed it maybe that their personal financial situation doesn’t not allow them to purchase a substantial volume of shares.

2.0 NZSA Position

2.1  The Associations view is that whilst it is preferable for Independent Directors to hold some shares it should not be mandatory and individual Directors should be free to decide whether they hold shares and if so, how many according to their personal financial position.