Ann: Chairman's Address to Shareholders, page-84

Yes, I agree, the ASA is recommending that the directors align themselves with shareholders by investing in the company. But I would expect that to be the case. It is after all the Australian Shareholders Association. The Australian Council of Superannuation Investors has a similar view on director shareholdings, but again this is a body representing shareholders.

On the other hand the Australian Institute of Company Directors is more cautious. This is also what you would expect given that directors are expected to run the company, not milk it for returns. Here is an example from the AICD website: Feature: Skin in the game

Excerpts:

• However, minimum shareholding requirements can have unintended consequences. “If a company makes a seat on a board conditional on investing a certain amount in shares this could preclude an entire cohort of candidates who are unable to meet that commitment,” says Daniel Smith, director of research at CGI Glass Lewis. “I don’t think it necessarily benefits shareholders to have boards consisting solely of independently wealthy directors.”
• Directors with a significant proportion of their wealth invested in their company could become more cautious and focused on the short term.
• The ASX Corporate Governance Council takes the view that a shareholding of 5 per cent or more could compromise a director’s independence.