Crunching the numbers

The Herald’s “Directors of the Decade” takes a broad approach rather than a deep one, seeking a measure that is easily available, consistent and with a nationwide spread.

In this case, we analysed company shares listed on the NZX, paired with their directors’ tenure as recorded on the Companies Register.

Choosing a 10-year period between January 1, 2009 and December 31, 2018, was arbitrary but intended to capture the current directing pool rather than that of the past.

The performance measure settled on was average gross return per share, a measure which takes into account both stock price movements and dividend payments.

This was in turn weighted against overall NZX performance during the tenure period to try to capture whether markets had been out- or under-performed.

Further refinements were made to limit volatility, culling small-cap stocks and backdoor listings like Veritas.

Only markets for ordinary shares were considered, in order to exclude illiquid and flat markets in more exotic securities.

And to capture both a pool of professional directors, and ensure each subject had multiple data points to measure, those with three or fewer public board postings were ignored.

The analysis initially looked at 364 stocks, filtered to 168, and 1986 directors, ultimately reduced to our busy pool of 33.

The measure does not capture a director’s private company performance, as financial information for these firms is rarely public or consistent.