Who’s really in charge of white-collar Australia? Of the thousands of men and women who sit in boardrooms, who are the 10 most powerful corporate and not-for-profit directors?

Ranking them — as The Power Index begins today — is no easy task. How do you begin to assess internal boardroom dynamics, let alone order a list of names? Should a powerful director be able to force change inside one firm, across a number of different organisations, or broadly as a public actor? Should directors of private companies be included?

Unlike previous lists, which have tended to focus on the combined market capitalisation of the ASX 200 companies on whose boards they sit, The Power Index decided to weigh up several objective and subjective measures to inform our top 10.

An exclusive Market Capitalisation Influence Index (MCII), compiled by leading ASX number crunchers Optimice, has been calculated to give a broader sense of an individual’s reach. A graphical illustration of each director’s immediate connections, and the proximity of auditors, has also been generated. The MCII shows that market cap remains important, but so does the “connectedness” of directors — the market cap of the other boards on which their fellow directors serve.

Whether a director chairs the board is crucial: under Australian Shareholders’ Association guidelines, one chair counts for two directorships when deciding whether a director is “overloaded” (it recommends five as a maximum). Indeed, there’s only 20 working days in a month and with four or five directorships, time commitment — and power — can wane.

“The problem,” according to ASA chief Vas Kolesnikoff, “is that if they spread themselves too thin then they don’t have the time to do the job to the level that their executive careers showed they could. For some of these guys, a chair should really be a full time job.”

Other keys include the number of people their companies employ (at 200,000, Wesfarmers, chaired by Bob Every, is the largest in Australia) and whether a director sits on influential internal committees like remuneration or audit. Chairmen — often paid double the fees of ordinary non-executive directors (over $1 million a year in the case of BHP Billiton chair Jac Nasser) — usually sit on the remuneration committee by default.

It is these “magnets”, or gatekeepers, that often wield the most power inside boards. Time on the board is also crucial– a “newbie” can take years to get up to speed compared to fixtures that have been around so long they’ve become part of the furniture.

Building on Crikey‘s recent “trophy board” list, The Power Index considered the important question of not-for-profit participation; a willingness to contribute to community, government or non-government organisations without the incentive of board fees. And the size of the board matters — an individual directorship can be be diluted by sheer weight of numbers (BHP Billiton has 13, Soul Pattinson seven).

Finally, we looked at the performance of companies over the last year and gauged whether results matched analysts’ expectations. And for completeness The Power Index has obtained independent analysis on the top 10 from the ASA.

“Those sort of directors give their seal of approval for new directors joining companies. They embed themselves, they attract or sort and sift through talent.”

We asked all directors on the list for an on-the-record interview. Of those that agreed, there was a reticence to explain or admit to their own power– possibly because such a brag would bolster pejorative claims about unaccountable elites.

Daniel Smith, the local research head of global corporate governance specialists Institutional Shareholder Services, defines a powerful director as “someone who has exemplified competence at running a company and has a long history of experience that allows him or her to provide effective oversight and guidance”.

“Those sort of directors give their seal of approval for new directors joining companies. They embed themselves, they attract or sort and sift through talent,” he said, giving the example of all-round supremo David Gonski.

Can a director be too powerful? What happens when board members overstep their boundaries to the detriment of shareholders and the public?

Smith cites executive chairman Reg Kermode’s vice-like grip over Cabcharge and Rupert Murdoch’s control of News Corporation as examples of individuals who wield outsized power inside their own fiefdoms. A breach can usually be picked up in disappointing annual results caused by a strategic blunder, but otherwise a power failure was “like p-rnography … you know it when you see it”.

Remedies include a co-ordinated AGM vote against individual directors, slapping down remuneration reports and taking advantage of the federal government’s two strikes legislation, which mandates a spill of all board positions if 25% of shareholders vote against a rem report two years in a row. However the “ultimate referendum”, Smith says, is offloading shares.

Aaron Bertinetti from ruthless proxy advisers CGI Glass Lewis fingers ex-Foster’s chair and BHP Billiton director David Crawford as someone who consistently “paid large amounts of money to his executives” without proper accountability. CGI has had no hesitation in making its views known.

There’s evidence the “directors’ club” of yore, epitomised by the likes of Crawford and his replacement on BHP, ex-KPMG buddy Lindsay Maxsted, appears to be fading. Where once old school ties played a role, there is now a trend, especially in the IT and medical sectors, to draft non-executive directors with specialist knowledge.

And two major blindspots recently highlighted by the Gillard government — an embarrassing lack of women (who constitute just 12.3% of directors on ASX 200 companies — 38% of companies have no women directors at all) and those with direct experience of Asia (in line with the Asian Century white paper recommendations) could emerge as effective Trojan horses for further change.

According to Smith (and the vast majority directors we interviewed), quotas can lead to “tokenism” — the best way to bust power cliques was by enriching the “executive pipeline” flowing into the pool from which directors are plucked.

The Power Index‘s top 10 directors list is by no means definitive and will probably be argued over as soon as it’s published. It may well be dismissed as a “what should be” list rather than a cogent measure of “what is”. But it will hopefully provide a snapshot of the interlocking web of boardroom actors whose private decisions shape everyday lives.