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NZX board doesn't support election of Falkenstein as a director, Miller says

Friday 2nd June 2017

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NZX's board told shareholders it doesn't support the election of Tony Falkenstein as one of its directors at its annual meeting later this month, saying it doesn't believe he would add sufficient additional skills, depth or experience to the current board.

Falkenstein, who founded the water cooler business Just Water International, has nominated himself to be put forward as a director of the stock exchange operator but the board doesn't support his election, NZX chair James Miller said in a letter to shareholders ahead of the NZX annual meeting on June 30 where the issue will be voted on.

Falkenstein's water company is listed on the NZX's small-cap NZAX market and he has publically tussled with the NZX in the past, speaking out against the exchange's new NXT market which aimed to target high-growth companies, and saying the business had become too bureaucratic and didn't do enough to encourage new listings.

In his letter released today, NZX's Miller said the governance services firm Propero Consulting had interviewed Falkenstein to formally assess him against a skills matrix and gap analysis used in recent NZX director appointments and this, together with a meeting he had, "determined that Mr Falkenstein would bring limited additional skills to the board".

"While it was recognised that Mr Falkenstein would bring to the board entrepreneurial skills and experience in the small listed company sector, his skills overlap with those of existing directors and are focused on an important but small part of NZX’s wider business," Miller said in his letter. " The board does not believe Mr Falkenstein would add sufficient additional skills, depth or experience to the current board."

The NZX board considered the attributes of all potential director appointments against a skills matrix and other important elements of board composition, including committee succession, relevant executive and governance experience, regulatory requirements, geographic location and diversity as part of this process, Miller said.

The process had identified Frank Aldridge and Richard Bodman, who were appointed as directors to NZX in the last two months to fill vacancies arising in 2017, he said. At the upcoming annual meeting, the board unanimously supports the elections of Aldridge, Bodman and the re-election of Patrick Strange, who joined the board in May 2015, he said. 

Aldridge had deep experience in capital markets and relevant financial services leadership, Bodman had deep experience in clearing, capital markets and funds management, while Strange had spent more than 30 years working as a senior executive and director in both private and listed companies.

"The board is of the view that the supported candidates would bring greater diversity and a wider range of skills to the board, particularly in the areas of funds management and clearing, where Mr Falkenstein has limited experience," Miller said.

Miller noted that Aldridge, Bodman and Strange meet the requirements of NZX's 'fit and proper' policy, which involves checks designed to ensure prospective candidates' character, capability, references and conduct are appropriate to govern NZX. The board hasn't had the opportunity to conduct checks on Falkenstein as required by its 'fit and proper' policy, he said.

NZX shares last traded at $1.09, having gained 14 percent over the past year.


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