Virgin Australia will have CEO-heavy boardroom with Air New Zealand, Etihad

By David Flynn, January 22 2014
Virgin Australia will have CEO-heavy boardroom with Air New Zealand, Etihad

The Virgin Australia board is about to get decidely CEO-heavy with Air New Zealand head Chris Luxon and Etihad Airways supremo James Hogan joining Virgin Australia chief John Borghetti (above) around the table.

But does a team of champions necessarily make for a championship team?

It's certainly an unusual arrangement to have several CEOs sitting on a board, according to Ian Ramsay, corporate law expert with the University of Melbourne.

"It's relatively rare at the larger end of the market to have what's unfolded in the last few days" Ramsay observes, "where the CEOs of such major shareholders are on the board, as opposed to other officers who are lower down the corporate hierarchy representing that company."

That's the likely path for third partner and soon-to-be board member Singapore Airlines.

It's not expected that Singapore Airlines CEO Goh Choon Phong will take a seat on Virgin Australia's board, with the airline likely to nominate one of Goh's executives or potentially Sydney-based regional vice president Subhas Menon, although the airline could also nominate an independent representative.

(As a matter of procedure, anyone nominated would still need to be approved by the board and would then serve as a 'casual director' until voted in by shareholders at the airline's annual general meeting in November this year.)

Ramsay admits that there is "always potential for a clash of personalities, indeed a clash of egos to occur" in the boardroom, but doesn't expect this to be an issue even with Virgin's assemblage of high-achieving executives.

"My starting assumption is that this wouldn't occur because you are dealing with experienced business people who have common objectives, and of course they're used to working with people, with boards and other directors."

Even so, Ramsay says that Virgin Australia chairman Neil Chatfield will be "absolutely vital" in steering the new board.

"The role of the chair is always important, but it becomes increasingly so in this type of context." 

"Research undertaken in recent years tends to demonstrate the importance of the chair in all sorts of ways, including ensuring constructive and productive relations among all members and very very importantly, positive and constructive relationships between the board and the CEO."

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David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

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