Board size
The average size of BIST 30 boards in 2023 was 9.4, marginally down from last year’s 9.5 and continuing to hover around previous levels.
ENKA, Gübre Fabrikaları, and ODAŞ have the smallest boards at five members each, followed by BIM with six. Koç Holding and Ford Otosan maintain the largest boards, each with 12 directors.
Independent directors
On average, BIST 30 companies have three independent directors per board (33%). Among new directors appointed in the year under review, 40% were deemed independent, an increase from the previous year when 25% of new directors were independent.
The highest share of independent directors (50%) is seen at Pegasus, followed by Emlak Konut (42.85%). The lowest share of independent directors is seen at Ford Otosan (17%), followed by Sabancı Holding (25%).
The Corporate Governance Principles (CGP) stipulate that at least one-third of directors should be independent. 82.1% of the companies in our sample meet this requirement, the same as in 2022. The proportion of independent directors on Turkish boards also remains the lowest across all European countries surveyed.
Our perspective
Concentrated ownership structures in the form of family-controlled financial/industrial groups are prevalent in Turkey, including among the BIST 30 companies. In Turkey, only 33% of board members in BIST 30 companies are independent, compared with more than 50% in nearly all surveyed European countries.
The shortage of independent directors in BIST 30 companies in Turkey may pose challenges related to impartial decision-making, governance transparency, and effective oversight, potentially impacting the overall corporate performance.
A significant portion of BIST 30 companies in Turkey are populated with family members and individuals who also sit on the boards of different companies. This overboarding situation might limit the diversity of available perspectives in the board, jeopardising capacity for innovation, adaptability, and sustainable growth. However, it is important to note that this year 40% of new directors are independent directors, marking a significant increase from previous year’s 25%. This demonstrates companies’ efforts to foster a more diverse atmosphere within their boards.
Executive directors
BIST 30 boards have, on average, two executive directors per board (16% of board members are executive directors).
Five companies had no executive directors on their boards, compared with nine last year. Four companies have three or more executive directors in their boards. Aksa (62.5%) and Sasa (45%) have the most, each with five executive directors.
The CEO sits on the board in 57% of the companies under review.
The roles of chair and chief executive
The division of the CEO and chair role is commonly recommended governance best practice. Keeping the two roles separate enhances the board’s autonomy from management, thereby reducing the risk of a captured board. In Turkey, the Corporate Governance Principles (CGP) advocates such a separation and requires companies to furnish an explanation should the roles be merged. For example, among OECD countries, a separation of CEO and chair is recommended, required or incentivised in 70% of countries with one-tier systems.
Although the CGP does not extend its recommendations beyond the separation of these two positions, none of the BIST 30 boards under review that combine the roles of CEO and chair has appointed a lead independent director, an independent vice chair or similar role.
A diligent lead independent director is able to oversee the performance of the board chair, acting as a versatile intermediary between the chair, the board, and stakeholders. This is especially helpful where CEO and chair roles are combined, as it can help to mitigate potential conflicts of interest and to align incentives.
We note that three companies — Aselsan, BIM, and Şişecam — have merged the positions of CEO and chair. Collectively, they represent 10.7% of the sampled companies.
New directors
During 2023, the boards of BIST 30 companies appointed 30 new directors. This represents a continuing decline in the renewal rate, from 44 new directors in 2022 and 52 in 2021. The rate of renewal has been decreasing for the last three years. This decline could be due to the pandemic.
Among new directors, 16 (53.3%) were independent. Ten (33.3%) new directors were women and five (16.6%) were executive directors. Four of the new directors were foreign (13.3%). The average age of new directors is 49, compared to 58 for all board members.
11 (36.6%) of the new directors are serving on a board for the first time. The average age of first-time directors was 41.
The highest rate of renewal was at Petkim, which appointed five (56%) new directors. Gübre Fabrikaları (80%), Hektaş (37.5%), and İş Bankası (27%) each appointed three new directors.
Background of new directors
A significant 23% of new directors have a finance background. On the other hand, only 10% of all directors have a finance background. The reason for this emphasis on finance expertise in new directors. This indicates that BIST 30 companies have placed a significant emphasis on directors with a finance background in their new appointments. This could be attributed to the hyperinflationary economic conditions with which Turkey is currently grappling.
Other prominent backgrounds include banking at 13%, business and administration professionals at 10%, government (13%), industrial, and law (both 10%), with the remaining 20% coming from various other sectors. This diverse mix underscores the multifaceted strategies companies are employing to remain resilient and competitive.
Our perspective
There is only one female executive director on BIST 30 company boards. Among the BIST 30 companies under review, only one company, Pegasus Airlines, has a female CEO, Güliz Öztürk, who was appointed last year, but she does not sit on the board. The sole female executive director serving on BIST 30 companies is Sibel Uğur from Petkim. Turkey is falling behind other European countries on gender diversity; Turkish companies should prioritise and emphasise board diversity more extensively.
The renewal rate of board directors fell in 2023, reducing the opportunities for organisations to enhance board diversity. More positively, rising appointments of foreign directors indicates that some BIST 30 companies are seeking more international perspectives.
The trend continues towards appointing younger directors, in the expectation that their more recently acquired specialist expertise and breadth of perspective will bolster company strategy.
Age of board members
The average age of all directors under review in the BIST 30 is 58 years. The highest average age is found at the Arçelik board, at 68.9 years. The youngest board is found at Erdemir, with an average age of 46.2, followed by Emlak Konut with 46.9.
The average age of chairs is 60 years, ranging from 40 to 93. Our chart illustrates the age distribution for chairs in Turkish boards.
Education of board members
The chart below shows the highest academic qualifications attained by BIST 30 board members.
Length of service
The average tenure of non-executive directors has increased by 13%, from 6.7 years in 2022 to 7.6 in 2023.
Our graph provides a detailed analysis of tenure categories by gender, foreign, and Turkish nationals. Tenure levels of independent and non-independent NEDs are also compared.
Tenure among female NEDs is generally longer than among their male counterparts.
Length of service among independent directors tends to be shorter than the overall average.
Tenure of chairs differs little from that of NEDs, although we note a higher-than-average tenure among executive and female chairs.
The longest-serving chairs run the boards of Tüpraş (15 years) and Sabancı (19 years); both are family members of the relevant holding companies.
Non-executive tenure (years)
|
Non-exec directors |
Non-exec chairs |
| All |
6.5 |
16.9 |
| Women |
7.0 |
22.3 |
| Men |
6.3 |
16.4 |
| Foreign |
4.1 |
10.4 |
| Nationals |
6.9 |
17.4 |
| Independent |
3.1 |
- |
| Not independent |
9.5 |
- |
Executive tenure
|
Tenure |
| CEOs |
8.5 |
| Chairs |
9.5 |
| Women |
0.7 |
| Men |
5.6 |
| Foreign |
2.2 |
| National |
5.7 |
Tenure of board chairs
|
2023 |
2022 |
2021 |
| <3 years |
5 (18%) |
9 (32%) |
10 (36%) |
| 3-6 years |
3 (11%) |
8 (29%) |
9 (32%) |
| 7-9 years |
6 (21%) |
5 (18%) |
4 (14%) |
| >9 years |
14 (50%) |
6 (21%) |
5 (18%) |