2017 Turkey Board Index

Transcription

1 2017 Turkey Board Index

2 International comparison About Spencer Stuart At Spencer Stuart, we know how much leadership matters. We are trusted by organizations around the world to help them make the senior- level leadership decisions that have a lasting impact on their enterprises. Through our executive search, board and leadership advisory services, we help build and enhance high- performing teams for select clients ranging from major multinationals to emerging companies to nonprofit institutions. Privately held since 1956, we focus on delivering knowledge, insight and results through the collaborative efforts of a team of experts now spanning 56 offices, 30 countries and more than 50 practice specialties. Boards and leaders consistently turn to Spencer Stuart to help address their evolving leadership needs in areas such as senior- level executive search, board recruitment, board effectiveness, succession planning, in- depth senior management assessment and many other facets of organizational effectiveness. For more information on Spencer Stuart, please visit Social Spencer Stuart Stay up to date on the trends and topics that are relevant to your business and Stuart 2017 Spencer Stuart. All rights reserved. For information about copying, distributing and displaying this work, contact: permissions@spencerstuart.com. 29 spencer stuart

3 Contents 2 Foreword 3 IN THE SPOTLIGHT: The internationalisation of boards 5 Highlights 7 Our survey approach 8 Board size and composition 14 Board governance 17 Remuneration 18 International comparison 24 COMPANY DATA TABLES turkey board index

4 Foreword The Spencer Stuart Board Index is an annual study that analyses aspects of board governance among major listed companies, including composition, committees, and remuneration. First published over 30 years ago in the US, Board Indexes are produced in 22 countries around the world on an annual or biennial basis. In 2014, we released the first Turkey Board Index, which focused on the companies that form the BIST 30 Index. This fourth edition updates our analysis of the BIST 30 based on data available for the most recent fiscal year. Our purpose is to provide business leaders with a snapshot of current practice on Turkish boards. In addition to data for each BIST company, we have again published a detailed chart showing how the BIST 30 Index compares with leading companies in the US and other European markets across a key range of governance measures. We hope that you will find this 2017 edition of the Turkey Board Index an interesting read. We welcome your feedback and the opportunity to discuss any of the issues that arise from our research. Kaan Okurer Felix Hafele Gülven Aytekin Spencer Stuart Turkey 2 spencer stuart

5 In the Spotlight The internationalisation of boards As Turkish listed companies increase their international footprint and seek partnership and acquisition opportunities abroad, they will need to diversify the membership of both management and boards in order to realise their ambitions. The composition of the board who the directors are, the skills and expertise they bring, and how they interact is critical for long-term value creation. Owners and shareholders understand the importance of having the right group of people sitting around the board table based on the strategic priorities of the business. One of the most significant changes in board governance around the world over the past decade has been the steady internationalisation of boards. This has been most noticeable in Europe, where non-nationals make up over 20% of directors in 11 out of the 15 countries we analyse in our Board Indexes. Furthermore, in nine out of 11 countries the proportion is over 30%, with the highest number of foreign directors in The Netherlands and Switzerland (57% and 59% respectively). While the majority of non-nationals on continental European boards are from other European countries, more and more boards are looking to appoint directors from more distant geographies, especially if they bring market expertise in areas where the business is seeking to expand. Board members must be able to dedicate enough time to the boards on which they sit, yet the demands on them are becoming more intense and fast-moving. This is an important consideration when creating a more international board. For an outside director, our experience suggests that 20 to 30 days a year is a reasonable estimate of the time commitment for a public company directorship. Inevitably this has consequences for who can plausibly be a candidate for a directorship, especially since in the case of foreign directors, there is the additional time taken up by travel to and from meetings. turkey board index

6 in the spotlight Boards must also make allowances for the fact that the presence of non-nationals may change the dynamic in the boardroom. Foreign directors should be welcomed, respected for their views and treated as fully rounded members of the board, not just as expert advisors. The board has a responsibility to ensure that foreign directors are given a full induction so that they can quickly get up to speed with the business and with local governance practices and conventions. Turkish boards stand to benefit from greater internationalisation, particularly given the country s unique position as a regional hub for a diverse geographical area. Currently, 18% of directors in the BIST 30 are foreign. Although this figure may not be significantly lower than in other countries, the majority of these foreign directors serve on boards of multinationals operating in Turkey or having significant shareholdings in Turkish companies. By contrast, in other countries most foreign board members sit as independent directors. We believe that it is in the best interests of Turkish businesses to look to strategic markets as a potential hunting ground for new independent board members. 4 spencer stuart

7 Highlights REMUNERATION The average annual fee paid to non-executive directors is TRY 241,973. The range of annual remuneration was TRY 73,828 (Garanti Bank) to TRY 462,000 (Koç Holding). All the above figures are gross. See page 17. try 241,973 The average remuneration for non-executive directors BOARD MEETINGS The average number of meetings is slightly lower than last year s figure of 17.9, although it remains the highest in Europe. However, if the companies with substantial state ownership are excluded, the average number of meetings falls to Ten companies on the BIST 30 do not disclose the number of board meetings, however several of these do indicate the number of decisions taken. See page The average number of board meetings INTERNATIONAL DIVERSITY Eighteen different nationalities are represented on Turkish boards, yet Turkish boards remain the least diverse in Europe. Only Italian companies (9.4% foreign directors) are less internationally diverse. However, Turkish boards did become more international with a growth of 1.6 percentage points over last year. See page % The proportion of foreign non-executive directors on BIST 30 company boards turkey board index

8 Highlights WOMEN ON BOARDS The percentage of women board directors in Turkey has decreased slightly, from 11.7% in 2016 to 11.1%. This figure remains lower than most European countries, but is higher than Russia (8.1%). However, if family members are excluded, the proportion of female directors falls to 6.6% 16 of the female directors in BIST 30 companies are shareholders, leaving only 16 female independent directors in total. More than one-third (37.9%) of companies do not have a single female board member, despite there being a soft target of 25% female representation. See page % The proportion of board members who are women 6 spencer stuart

9 Our survey approach The 2017 Turkey Board Index is a survey of the 30 largest companies by market capitalisation listed on the BIST exchange, as of 31 May This cut-off date for board membership has changed from 30 September last year, in order to align data with our other European Board Indexes. Since the 2016 edition, Doğan Şirketler Grubu Holding has been replaced by Doğuş Otomotiv in the BIST 30 and Koza Altin is excluded from our analysis. We analysed board size and composition, committee structure and director compensation for the 2016 financial year, compiling our research from a combination of publicly available sources. Measured as of 31 May 2017:»» Supervisory board composition»» Management board composition»» Female representation»» Independence»» Tenure»» Board commitments»» Age»» Foreign representation Measured as of 31 December 2016:»» Board meetings»» Board committee meetings Measured as of 2016 Annual General Meeting:»» Board remuneration The Turkey Board Index focuses on quantifiable data pertaining to boards of directors. It offers comparisons with leading companies in a number of other European countries, namely Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Poland, Russia, Spain, Sweden, Switzerland, and the UK, as well as with S&P 500 companies in the USA. turkey board index

10 Board size and composition BOARD SIZE 52% of companies have between 8 and 11 directors. The average number of directors on a BIST 30 board is 9.8, a slight decrease from 10 in the previous year. This figure is near the average of European boards. The most common number of directors remains at nine. The largest board is Koç Holding with 17 members, while ENKA and Soda Sanayii continue to have the smallest boards with five directors each. THE BROADER VIEW: Board size Turkey Belgium Denmark Finland France Germany Italy Netherlands Norway Russia Spain Sweden Switzerland UK USA Board members EXECUTIVE DIRECTORS Executive directors account for 12.2% of board members. Turkish boards contain 1.2 executive directors on average. The CEO is a member of the board on 83% of boards. One-third of companies (31%) have at least two executive directors on their board. Six company boards consist only of non-executives, and 14 companies have one executive director (CEO) on the board. Akbank has the greatest number of executives on its board with four executive directors. THE ROLES OF CHAIR AND CHIEF EXECUTIVE As in many European countries, the roles of chair and CEO in Turkey are commonly split; the role is combined only at four companies: BIM, ENKA, Erdemir, and Tekfen. Five companies combine the roles of CEO and vice chair, while at a further five companies the CEO is absent from the board. By law, the CEO is required to sit on the board of Turkish banks, although the role cannot be combined with that of chair. This separation of roles is also supported by the Corporate Governance Principles outlined by the Capital Markets Board of Turkey (CMBT). 1 1 Corporate Governance Principles, Capital Markets Board of Turkey. June spencer stuart

11 INDEPENDENT DIRECTORS Independent directors make up 32.7% of all board directors (executives and non-executives combined), an increase from 31% in the previous year, while 39.3% of non-executive directors are deemed to be independent. The Corporate Governance Principles state that independent board members should comprise at least one third of the board of directors. In our survey, 17.2% of companies did not meet this standard. Not a single BIST 30 company has a majority of independent directors, but 17.2% of companies did have at least 40% of directors who qualify as independent. Every company meets the requirement that there should be at least two independent directors on the board. One of the criteria for independence eligibility as a director in Turkey is to be a resident in accordance with the Income Tax Law no 193. This requirement is potentially limiting, both in terms of foreign director diversity as well as the ability for a director to qualify as independent. The proportion of independent directors on Turkish boards remains one of the lowest in Europe. By contrast, independent directors account for 60% of all board members in Germany, 61% in the UK and 69% in France (see chart below). THE BROADER VIEW: Independent directors Turkey Belgium Denmark Finland France Germany Italy Netherlands Norway Russia Spain Sweden Switzerland UK USA Independent director % 32.7% 45.9% 77.2% 84% 69.1% 60% 51% 83.6% 76.3% 36.7% 44% 69.6% 84% 61.4% 85% turkey board index

12 Board size and composition WOMEN directors Female board members held 11.1% of all director seats, which is a decrease from last year s figure of 11.7%. The number of companies with at least one female on their board remains at 18 (62.1% of companies), leaving 11 companies with male-only boards. When family members are excluded, the proportion of female directors falls to 6.6% 16 of the female directors in BIST 30 companies are shareholders, leaving only 16 female independent directors in total. Turkey remains at the lower end of gender diversity in Europe, just ahead of Russia (8%). Norway (45.4%), France (42%), and Sweden (38.3%) continue to lead in female board representation. Unlike Norway or France, Turkey does not have a gender quota prescribed by law. Instead soft law is preferred, the CMBT having set a target of 25% female representation on boards. 2 Company boards are expected to review the implementation of this target annually. Female executive directors on boards in Turkey are also a minority 11.4% of executive directors (four in total) are women. Of these, two are chairs. Female chairs make up 6.9% of all chairs in Turkey, a figure that is higher than France (2.5%), Germany (3.3%), and the UK (4.7%). In executive committees, women make up 8.9% of all members, which is also at the lower end, just ahead of Switzerland (8.4%). Fourteen companies (48.3%) did not have a single female member on their executive committee, and not a single BIST 30 company had a female CEO. THE BROADER VIEW: Women on boards Turkey Belgium Denmark Finland France Germany Italy Netherlands Norway Russia Spain Sweden Switzerland UK USA Proportion of women 11.1% 30.4% 28% 33% 42% 28.7% 31% 30.4% 45.4% 8.1% 17% 38.3% 22.2% 25.5% 22.2% 2 Decree II January spencer stuart

13 Foreign directors by nationality Asian (20.8%) Other European (20.8%) Italian (18.8%) North American (14.6%) French (10.4%) Spanish (10.4%) Other (4.2%) FOREIGN DIRECTORS The proportion of foreign non-executive directors on Turkish boards has increased slightly, from 16.2% in 2016 to 17.9% in On Turkish boards, 8.6% of executive directors are foreign. Italians represent the largest group of foreign directors at 18.8%, while other Europeans make up 41.6% of all foreign directors. The overall proportion of foreign directors (executive and non-executive) is 16%. THE BROADER VIEW: Foreign directors (executives and non-executives combined) Turkey Belgium Denmark Finland France Germany Italy Netherlands Norway Russia Spain Sweden Switzerland UK USA Foreign director % 16% 31.2% 42.1% 36.5% 37% 31% 9.4% 57% 24.3% 22.8% 19% 30.9% 59.4% 32.3% 7% turkey board index

14 Board size and composition NEW DIRECTORS A total of 35 new directors were appointed to Turkish boards during the past year (29 non-executive and six executive), 5.7% of whom were female and 20% foreign. Of the 35, 10 (28.6%) of them were deemed to be independent. New directors accounted for 15.3% of all non-executive directors and 12.2% of all directors in BIST 30 companies. AGE OF DIRECTORS The average age of BIST 30 non-executive directors is 60.3 years, higher than most European peers, but lower than Germany (61), the Netherlands (61), and Switzerland (61.1). The Emlak Konut GYO board has the lowest average age (47.5), while Tekfen has the highest (69.1). The average age of executive directors on the board is 55.8, which falls in the middle of the European peer group. The average age of all directors (executive and non-executive) is 59.7 years. Chairs serving in the BIST 30 have an average age of 60. The oldest chair leads the board of Kardemir at 89.4 years; the youngest chair sits at THY, at 46.4 years of age. The average age of CEOs serving on BIST 30 boards is 57.4 years, while the average age of all BIST 30 CEOs is 56.2 years. This age is slightly higher than the European average, but below the Netherlands (56.7), France (57.7) and Italy (58). THE BROADER VIEW: Average age of directors (executives and non-executives combined) Turkey Belgium Denmark Finland France Germany Italy Netherlands Norway Russia Spain Sweden Switzerland UK USA Average age spencer stuart

15 LENGTH OF SERVICE The average tenure of non-executive directors on BIST 30 boards, excluding chairs, is 5.7 years. For chairs, the average tenure is 6.3 years. Two chairs were appointed within the last year (Erdemir and Şişecam), and three chairs have more than 15 years experience in their role (Doğuş Otomotiv, ENKA, and Garanti Bank, although the chair of Garanti Bank has changed since the cut-off date for our research). The average tenure for CEOs is 3.8 years, which is low compared with the average tenure of current CEOs across Europe (6.6 years). Three companies appointed a new CEO in the past year: Sabanci Holding, THY, and Türk Telekom. The CEOs of Sabanci Holding and THY held divisional roles before moving into the CEO role. The CEO of Türk Telekom is serving his second period as CEO, having served previously from THE BROADER VIEW: Average tenure of all directors Turkey Belgium Denmark Finland France Germany Italy Netherlands Norway Russia Spain Sweden Switzerland UK USA Average tenure turkey board index

16 Board governance BOARD MEETINGS Turkish companies held on average 16.9 meetings in 2016, which is on a par with the previous year, and the highest in Europe. Disclosure around the number of meetings remains opaque; some companies choose only to disclose the number of decisions made, not the number of meetings held to arrive at those decisions. Scheduled board meetings in 2016 Number of scheduled board meetings < >30 Not disclosed Percentage of companies 27.6% 20.7% 10.3% 10.3% 31% Ten companies did not disclose the number of board meetings held and the majority of companies did not disclose the board meeting attendance rate. Arçelik met the fewest times with only three meetings covering 42 decisions, while THY held 48 meetings. If we exclude the five companies with substantial state ownership, the average number of meetings falls to 12.4, which is only slightly higher than the average across Europe. THE BROADER VIEW: Average number of board meetings Turkey Belgium Denmark Finland France Germany Italy Netherlands Norway Russia Spain Sweden Switzerland UK USA Board meetings/year spencer stuart

17 BOARD COMMITTEES BIST 30 boards have an average of 3.8 committees, similar to last year s figure. The number of committees per company ranges from three to eight. Most companies have an audit, corporate governance, and early detection of risk committee as outlined in the Corporate Governance Principles. Additional committees include credit, corporate social responsibility, and sustainability. A complete list of committees in BIST 30 companies can be found on page 26. Committees of BIST30 boards Number of committees Percentage of companies 63.3% 20% 13.3% 3.3% Audit committee Our analysis of board committees has been expanded in greater detail in this year s index. For the first time, we have analysed the committee meetings and backgrounds of audit committee chairs. Every company in the BIST 30 has an audit committee, which met 7.4 times on average. The audit committees of eight companies met only four times, while the audit committee of İşbank held 33 meetings. Backgrounds of audit committee chairs CEO: Finance sector (21%) Government (21%) Financial services (21%) CEO: Other sectors (17%) Academia (3%) Other/not disclosed (17%) turkey board index

18 Board governance The backgrounds of audit committee chairs in Turkey are predominantly as CEOs across a variety of sectors. Unlike their European peers, CFOs do not comprise a significant portion of the audit committee chairs in Turkey. CEOs from finance companies made up 20.7% of the chairs, while two other groups government officials and those from other financial services roles composed similar shares of audit chairs backgrounds. Corporate governance compliance As part of the Corporate Governance Principles, companies can choose to receive an externally evaluated corporate governance rating. This score is a value out of 10 that is calculated based upon the level of compliance with the principles. Of the BIST 30, 16 companies were evaluated in 2016 and disclosed their corporate governance rating. Tüpraş recorded the lowest score at 7.91, and TAV the highest at The average rating of the group was 9.2; three companies scored above 9.5 (Arçelik, Doğuş and TAV). 16 spencer stuart

19 Remuneration The level of disclosure for remuneration of board directors in Turkey remains opaque. Unlike many European peers, remuneration per director is not disclosed and only the total fee for directors is disclosed as an agenda item at annual general meetings. Details relating to the remuneration, committee fees, and attendance fees of the board chair are largely unavailable. Furthermore, several companies only remunerate independent directors directors holding a public office or representing a shareholder group are largely not remunerated. The average fee for non-executive directors in Turkey is TRY 241,973 ( 72,382). Garanti Bank had the lowest fee at TRY 73,828 ( 22,084), while Koç Holding had the highest at TRY 462,000 ( 138,199). All the above figures are gross. Compared with their European peers, Turkish boards remunerate lower than the average, but at levels just above those of boards in Finland. THE BROADER VIEW: Non-executive director fees * Country Average fee Country Average fee Turkey 72,382 Norway 40,034 Belgium 51,859 Poland 33,531 Denmark 85,462 Russia 142,032 Finland 70,307 Spain 131,518 France 87,780 Sweden 81,656 Germany 83,867 Switzerland 272,673 Italy 92,000 UK 107,106 Netherlands 93,699 USA 260,984 * All conversions into Euros are based on the yearly average exchange rate for 2016 (1 TL = EUR) turkey board index

20 International comparison In this edition of the Turkey Board Index we provide two sets of tables. In addition to the detailed data for BIST 30 companies (beginning on page 24), we are publishing a chart comparing aggregated data from 17 countries (pages 18-23). All data is taken from individual country Board Indexes published by Spencer Stuart in Visit the Spencer Stuart website and discover Boards Around the World, a visual tool that compares the composition, diversity, compensation and board evaluation practices of different countries. Composition information BELGIUM BeL20 + BelMid CANADA 100 TSX Listed Companies (revenue C$1billion to C$53.3 billion) DENMARK OMX Copenhagen FINLAND OMX Helsinki FRANCE CAC40 GERMANY DAX30 ITALY 38 (FTSE MIB) + 62 (Mid Cap, Small Cap, Other) NETHERLANDS AEX NORWAY Oslo Stock Exchange POLAND WIG RUSSIA Top companies from Expert 400 SPAIN IBEX top companies by market cap SWEDEN OMX Stockholm SWITZERLAND SMI TURKEY BIST 30 UK FTSE 150 USA S&P 500 Denmark, Finland, Norway and Sweden s top companies are analysed together in the Nordic Board Index 18 spencer stuart

21 International comparison footnotes General N/A = Not applicable. A blank cell denotes that either the information is not available or we did not include it our research. Belgium 1 11 companies did not disclose whether they conducted a board evaluation 2 One company does not disclose 3 45 companies do not remunerate company separate 4 Five companies do not remunerate chairs 5 12 companies do not remunerate 6 18 companies do not remunerate Canada 7 Does not include companies with term limits. 8 Includes share grants Denmark 9 Age of the only executive director 10 Excludes employee representatives Finland 11 3 companies have employee representatives on the board 12 Age of the only executive director 13 Excludes employee representatives 14 Fee calculated by multiply per meeting fee by number of meetings held in 2016 France % of external evaluations done by Spencer Stuart in 2016 and 80 % of the CAC 40 companies perfom an external evaluation at least every 3 years 16 Including chairs who are also CEO 17 According to Afep/Medef corporate governance code (Employees excluded) % of the CAC 40 companies have set up a limit which is individual for 35 % of them and collective for the 50 % left (Maximum 1/3 of board members>70 years old) 19 Additional remuneration for vice-chairs or lead directors (paid in addition to ordinary director's fees) 20 Non-executive chairs only 21 Total additionnal fee for remuneration committee, calculation based on the number of meetings held during 2016 FY % of remuneration and nominations committees are merged Germany 23 Average minimum proportion of members that shall be independent 24 Remunerations committees are very rare in Germany 25 Except for banks, German nominations committees only deal with non-executive director nominations and committee membership is rarely compensated Italy 26 "Only four companies have set an age restriction for directors; the age limits are 75 (3 companies) and 77 Three companies have an age restriction for CEOs and the age limits are 67 and 65 (2 companies) Two companies have an age restriction for chairs and the age limits are 65 and 70" 27 Average fee for SIDs is 90, Only 20 companies in the Index have an Executive Committee Netherlands 29 One company did not disclose whether they conducted a board evaluation 30 9 companies do not disclose Norway 31 Excludes employee representatives Poland 32 2 companies have employee representatives on the board 33 Excludes 76 of 160 directors whose age is not disclosed 34 Excludes 8 chairs whose age is not disclosed 35 Excludes 64 of 134 directors whose age is not disclosed 36 Excludes employee representatives Russia 37 8 companies do not disclose 38 11companies did not disclose whether they conducted a board evaluation companies do not disclose remuneration companies do not disclose remuneration companies do not disclose remuneration companies do not disclose remuneration companies do not disclose remuneraiton companies do not disclose remuneration companies do not disclose remuneration Spain 46 Top 50 companies only 47 Includes both executive and non-executive directors 48 Average additional fee paid to senior/lead independent directors 49 Only 14 % of companies in Spain have divided the nominations & remunerations committee into separate commmittees. The average fee for members of the nominations & remunerations committee is Sweden 50 Excludes employee representatives Switzerland 51 Excludes social contributions Turkey companies do not disclose UK 53 TUI is the only company without a senior independent director as it has a two-tier board % of non-executive directors are independent 55 Includes the 142 part-time chairs only. Six chairs are full-time and remunerated on a different basis. Two chairs receive no fee. 56 Based on 47 companies that have a nomination chairs separately remuneration for this role USA 57 CEOs only 58 Average tenure of independent directors only 59 Non-executive chairs only turkey board index

22 International Comparison BELGIUM CANADA DENMARK FINLAND FRANCE GERMANY ITALY GENDER FOREIGN AGE BOARD GENERAL INFORMATION Size of sample Supervisory board/unitary board of directors Average number of board meetings per year % companies that conducted an external board evaluation 1/57 n/a 25/0 0/25 5/35 30/0 2/ % 1 n/a 16% 12% 40% 15 17% 28% Combined chair and CEO 1.7% 12% 0% 0% 52.5% n/a 19% % boards with senior independent director (SID) 1.7% 32% 0% 0% 48% n/a 39% % of boards with vice/deputy chair 20.7% 18% 100% 96% 73% 30% 50% Average board size (total) Average board size (excl. employee representatives) Average number of independent board members n/a % independent board members 45.9% 80% 77.2% 84% 69.1% 60% 23 51% Average number of non-executive directors Average number of executive directors n/a 2.4 Av. age: all directors Av. age chairs Av. age CEOs who sit on the board n/a n/a 57.6 Av. age all CEOs, including those not on the board n/a 58 Av. age: non-executive directors Av. age: executive directors n/a 58.1 % foreign board members (all) 31.2% 27% 42.1% % 13 37% 31% 9.4% % foreign chairs 13.8% 15% 28% 16% 23% 20% 5% % foreign non-executive directors 32% 29% 44.8% 39.7% 40% 31% 11% % foreign executive directors 33.8% 16% 0% 0% 21% 16 n/a 4.5% Av. # nationalities represented on the board % female board directors (all) 30.4% 26.8% 28% 10 33% 13 42% % 31% % female chairs 5.2% 8% 0% 4% 2.5% 3.3% 9% % female CEOs 9.8% 4% 8% 0% 2.5% n/a 8% % female non-executive directors 36.2% 31% 33.1% 37.4% 46% 32% 37% % female executive directors 14.9% 5% 0% 0% 2.6% n/a 10% % boards with at least one female director 100% 99% 96% 100% 100% 100% 99% 20 spencer stuart

23 NETHERLANDS NORWAY POLAND RUSSIA SPAIN SWEDEN SWITZERLAND TURKEY UK USA /7 0/25 20/0 7/36 0/100 0/25 0/20 0/29 1/149 0/ % 29 12% 0% 18.6% 38 30% 12% 15% n/a 43.3% 2% 4% 0% 0% 0% 66% 4% 0% 13.8% 0.67% 49% 16% 0% 0% 20.9% 63% 4% 15% 0% 99.3% 53 85% 68% 52% 75% 41.9% - 48% 85% 93.1% 10% n/a n/a n/a 9.2 n/a n/a 10.1 n/a % 76.3% 49.4% 36.7% 44% 69.6% 84% 32.7% 61.4% 54 85% % n/a n/a n/a % 24.3% % % 19% 30.9% 50 59% 16% 32.3% 7% 32% 8% 10% 20.9% 6% 12% 42.9% 6.9% 21.3% % 27.8% 20.1% 26.6% 20.4% 36.4% 60.9% 17.9% 35.6% % 0% n/a 2.8% 9% 0% 71.4% 8.6% 22.3% % 45.4% % % 17% 38.3% % 11.1% 25.5% 22.2% 4% 12% 30% 0% 7% 8% 4.8% 6.9% 4.7% 6% 0% 0% 0% 0% 2% 12% 0% 4.3% 5.6% 6.2% 32% 52.4% 20.1% 10.2% 19.5% 44.9% 24.9% 12.2% 34.8% - 7.7% 0% n/a 2.8% 3.4% 10.5% 0% 11.4% 8.9% - 84% 100% 80% 48.8% 90% 100% 95% 62.1% 98.7% 99.2% turkey board index

24 International Comparison BELGIUM CANADA DENMARK FINLAND FRANCE GERMANY ITALY REMUNERATION TENURE/RETIREMENT OTHER BOARDS NEW MEMBERS % new board members 10.4% 8% 17.5% 16% 17.9% 19.7% 18% % women among new board members % non-nationals among new board members 45.9% 41% 33.3% 50% 37.5% 40% 46% 42.1% 40% 56.7% 53.1% 35.9% 13.3% 12% Av. # quoted boards per director (total) Av. # quoted boards per chair (total) % executive directors with an outside board 29.9% 39% 0% 0% 56% % % non-executives with a full-time executive role % companies with a mandatory retirement age 70.1% % 56.3% 58% 31% % 26% 7 64% 8% 35% % 4% Average mandatory retirement age Average tenure (chair and non-executives) Av. retainer for non-executive directors (excluding chair and vice chair/sid) Av. total fees for non-executive directors (excluding chair and vice chair/sid) , , ,968 55,436 34,900 83,867 59,000 51, ,648 85,462 70,307 87,780-92,000 Av. total fee for vice chair (or SID) 98, , ,790 93,784 53, , Av. total fee for chairs 118, , , , , , ,000 Av. fee for audit committee membership 11, ,877 20,874 5, , ,458 18,000 Av. fee for remuneration committee membership Av. compensation for nomination committee membership 7, ,432 16,683 4, ,198 21, ,000 8, ,792 15,713 3, ,625 21, ,000 Average board size of executive committee EXCOM % foreigners on the executive committee 34% - 42% 35% 35% - 6.5% % women on the executive committee 18.2% % 18.9% 15% - 12% 22 spencer stuart

25 NETHERLANDS NORWAY POLAND RUSSIA SPAIN SWEDEN SWITZERLAND TURKEY UK USA 9.2% 17.8% 27.5% 18.8% 14.6% 15.2% 9.9% 12.2% 12% 7.5% 36.8% 40.1% 27.3% 11.9% 28% 40% 33.3% 5.6% 42% 36% 68.4% 33.3% 9% 20.2% 39% 34.3% 71.4% 19.4% 43.3% 8% % 0% n/a 19.7% 9.6% 57.9% 14.3% 20% 26.4% 46% 39.4% 77.8% 74.6% 74.3% % 44.3% 53.8% 31.5% - 16% n/a n/a 0% 23% n/a 55% 0% 0% 73% 72.3 n/a n/a n/a 72.1 n/a 71.3 n/a n/a ,712 31,532 32, , ,758 62, ,458 72,382 82, ,771 93,699 40,034 33, , ,518 81, , , , , , ,280 33,771 n/a 41 30, , ,317 n/a 129, ,319 68,109 47, , , ,701 1,913,819 n/a 314, , ,432 7,670 n/a 12, , ,859 49,806 n/a 16,720 12,146 9,895 4,485 n/a 13, ,703 10,738 36,653 n/a 15,468 10,666 8,880 n/a n/a 14, ,188 n/a 38,736 n/a 10, , % 19% 11.9% 4.0% % 62.1% 5.4% % 23.6% 11.9% 11.6% % 8.4% 8.9% - - turkey board index

26 Foreign Chair? Chair Also CEO? Foreign CEO? Board composition Nationalities on the Board including Chair Total Number of Directors Akbank 10 No No No 1 Arçelik 12 No No No 1 BIM 6 Yes No No 3 Coca-Cola İçecek 12 No No No 1 Doğuş Otomotiv 9 No No No 1 Emlak Konut GYO 7 No No No 1 ENKA 5 Yes No No 1 Erdemir 9 Yes No No 1 Ford 13 No No No 4 Garanti Bank 11 No No No 2 Halkbank 8 No No No 1 İşbank 11 No No No 1 Kardemir 11 No No No 1 Koç Holding 17 No No No 7 Otokar 9 No No No 1 Petkim 9 No Yes Yes 2 Sabanci Holding 9 No No No 1 Soda Sanayii 5 No No No 1 Şişecam 9 No No No 1 TAV 11 No No No 2 Tekfen 10 Yes No No 2 THY 9 No No No 1 Tofaş 12 No No No 4 Tüpraş 15 No No No 1 Türk Telekom 12 No Yes Yes 4 Turkcell 7 No No No 2 Ülker 8 No No No 1 Vakiflar Bankasi 7 No No No 1 Yapi Kredi Bankasi 14 No No No 4 24 spencer stuart

27 INDEPENDENT TOTAL FOREIGN WOMEN FOREIGN TOTAL WOMEN FOREIGN WOMEN non-executive DIRECTORS (EXCLUDING CHAIR) NON-EXECUTIVES APPOINTED 1 JUNE MAY 2017 MANAGEMENT BOARD EXECUTIVES ON THE BOARD (EXCL. CHAIR) TOTAL NUMBER OF DIRECTORS N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A turkey board index

28 chair CEO Tenure, meetings, committees and fees TENURE AVERAGE AGE OF ALL DIRECTORS NON-EXECUTIVES (EXCL. chair) Akbank Arçelik BIM Coca-Cola İçecek Doğuş Otomotiv Not disclosed Not Disclosed Emlak Konut GYO ENKA Erdemir Ford Garanti Bank Halkbank Işbank Kardemir 6.0 Not Disclosed Not disclosed 64.7 KoçHolding Otokar Not disclosed 63.6 Petkim Not disclosed 56.5 Sabanci Holding Soda Sanayii Not disclosed 52.6 Şişecam TAV Not Disclosed 10.3 Not disclosed 57.9 Tekfen THY Tofaş Tüpraş Türk Telekom Turkcell Ülker Vakiflar Bankasi Yapi Kredi Bankasi Key to committees A AsL C CG CM Cr Audit Asset Liability Compensation Corporate Governance Corporate Management Credit CSR Corporate Social Responsibility EaDeRi Early Detection of Risk Ex Executive M Management N Nomination R Re Ri S TRNC Remuneration Revision Risk Sustainability Turkish Republic of Nothern Cyprus Internal Systems 26 spencer stuart

29 Retainer Fee (net) SCHEDULED BOARD MEETINGS NUMBER OF COMMITTEES NAMES OF COMMITTEES Retainer fee (gross) 8 Not disclosed 1 6 A4; Not Disclosed 120, A6; CG6; Ex(Not Disclosed); Ri&M6 330, A6; Not Disclosed 60,000 93, A5; CG5; EaDeRi3 84, , A6; CG&S4; EaDeRi5; R&N3 240, ,000 Not disclosed 3 A4; CG4; EaDeRi3 116, , A5; CG2; EaDeRi6 186, , Not Disclosed 79, ,732 Not disclosed 2 4 Not Disclosed 330, A8; CG3, Cr32; R2 48,000 73, A12; AsL50; C1; CG4; Cr50; Ri12; S6 175, , A33; CG4; Cr(Not Disclosed); Cr&R3(Not Disclosed); CSR7; R3; Ri(Not Disclosed); TRNC6 310, , A6; CM1; EaDeRi6 240, ,000 Not disclosed 3 4 A2; Not Disclosed 462,000 Not disclosed 4 3 A5; CG7; Ri&M7 357, A4; CG3; EaDeRi6 198, A4; CG6; Ri6 120,000 Not disclosed 5 3 A4; CG5; EaDeRi8 132,000 Not disclosed 6 3 A16; CG5; EaDeRi10 92, A4; CG6; N2; Ri6 196, , Not Disclosed 165, Not Disclosed ND ND 21 3 A5; CG5; EaDeRi6 330,000 Not disclosed 4 A7; CG6; EaDeRi6; Ex12 330, A8; CG4; EaDeRi6; Ex(Not Disclosed) 96, , Not Disclosed ND ND Not disclosed 7 3 A4; CG4; Ri6 56,400 87, A16; AsL44; CG2; Cr75; R1 175, , A4; CG2; Cr51; Ex20; R2 357,000 Footnotes 1 Minimum 12 meetings per year is mandatory 2 Minimum 3 or 4 meetings per year is mandatory 3 29 decisions 4 22 decisions 5 41 decisions. Minimum 12 meetings per year is mandatory decisions. Minimum 12 meetings per year is mandatory 7 31 decisions 8 Around half of the BIST companies disclose director remuneration as a net figure. Where a net figure is disclosed we have provided a gross figure (estimated) for comparison purposes. turkey board index

30 28 spencer stuart

31 Board Governance Trends: A Global View Spencer Stuart Board Governance Trends is an exclusive source of insight into board governance best practices. Here you will find all of our latest country-specific Board Indexes; numerous articles of value to any board of directors; the latest edition of Boardroom Best Practice ; as well as Boards Around the World, a uniquely visual comparison of global board data and practices. Visit our one-stop online resource for the latest data in board composition, governance practices and director compensation among leading public companies in more than 20 countries. and- insight/board- indexes Visit spencerstuart.com for more information. turkey board index

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