Bad time to ask for increase in directors' fees
Now is not the right time for company directors to ask for a fee increase, a strategic remuneration company says.
John McGill, managing director of Strategic Pay, said given the global financial crisis and protests about perceived corporate greed both in New Zealand and around the world, any directors putting their hands out for higher fees should think about their timing.
“With an election here just weeks away, there are groups likely to have some pretty strong comments on anything concerning top-level remuneration,” Mr McGill said.
“While increasing fees for directors will always generate comment, seeking to do so at present can be seen as particularly bad timing.
“Directors are inevitably viewed with suspicion in matters involving fee level increases,” he said.
Mr McGill was not surprised directors were seeking increased remuneration, given that they faced increased responsibilities and were seen as more accountable
They are understandably looking closely at the risks they face in addition to the workload being placed on them by a more demanding business climate, he said.
“And it’s definitely not a one-way street, as two thirds of the 270 government and non-government organisations we surveyed indicated they would be freezing fees for the coming 12 months.”
The Strategic Pay survey, done earlier this year, showed that directors’ fees increased 4.9% a year between 2008 and this year and that for the latest period, the median remuneration for a non-executive chairman was $62,606, while for a non-executive director it was $35,000.
The survey showed that to earn their fees directors attended an average of 9.2 meetings a year.
For 29% of those surveyed, the meetings went on for five or more hours, excluding the background work that came with the job.