More boards had director fee increases in 2011 than 2010, but the increases were smaller than previous years.

The latest Moyle Remuneration Consulting Survey report shows 48% of director respondents had a fee increase in 2011, compared to 40% in 2010.

The median increase in director’s fees was 11.1% and chairperson fees rose a median 12%. Between 2004-2009 median increases were consistently between 15%-20%.

Median annual fees in 2011 were $34,429 for directors and $63,355 for chairpeople.

Some boards also saw decreases in its fees, notably when the Pumpkin Patch directors chose to decrease fees. It was highly unusual, Moyle’s director Jarrod Moyle says.

“When a company is going through a difficult time it certainly requires the energy, expertise and energy of skilled directors and it would be an unusual practice to reduce fees,” Mr Moyle says.  

The report recommends director’s remuneration should be reviewed yearly and not once every three or four years because it would reduce the levels of resentment amongst the public when they see director fee increases of 15-30% as they catch up to market values, Mr Moyle says.

65% of respondents indicated an increase in their workload, driven mostly by new committees being introduced to boards, he says.

The gap between listed and public-sector board fees widened. In 2005 listed company directors were paid 1.4 times more the median fee than public-sector directors, but in 2011 that gap has widened with listed company directors now earning almost double the median fee of their public-sector counterparts earn.

Private company director fees were 1.3 times more than the public-sector. Listed company directors earned 1.5 times more than private company directors.  

“Size plays a part in that but even when you remove size and look at similar sized entities public sector entities still have director fees significantly less then those in private or listed companies.

“There are additional pressures on directors of listed companies and there’s greater disclosure and regulation requirements. That is reflected in the listed company director’s fees,” Mr Moyle says.

Australian director fees were almost three times that of New Zealand counterparts, partly because there were more companies but also because directors weren’t valued as much in New Zealand, he says.

“In Australia, I believe, they place a greater emphasis on having good governance and directors and are prepared to pay.

“I think there is a lack of understanding about what directors do and what they can contribute to a company. Some of that has been highlighted recently in terms of some directors facing criminal charges and there are significant risks to them, personally and to their reputation, if they are found negligent,” Mr Moyle says.

The gap between Australian and New Zealand director’s fees had been widening, he says.