Directors fees rise 3%

Directors' fees are rising at a more conservative rate, a survey suggests.

But a non-executive director of an overseas-owned company still gets more than double that of a non-executive director of a New Zealand company.

The Institute of Directors 2012 Directors’ Fees Report has calculated the median fee for a non-executive director increased by 2.9% to $36,000 over the last year.

Executive remuneration has traditionally risen by about 5% a year.

Median fees for a non-executive chairman increased by 15.3% to $48,834.

Institute chief executive Ralph Chivers says the better deal for a chairman reflects a trend towards addressing the premium paid to those who lead the board.

“In an environment where boards are facing more scrutiny and regulation than ever, there is a greater recognition of the responsibility and risks taken on by the chairman or woman.”

The gap between average fees paid to male and female non-executive directors remains quite large – $39,553 vs $24,500.

Mr Chivers says there is nothing to indicate this is reflective of women being paid less for doing the same job.

“The variance is reflective of the significant representation of women on not-for-profit boards (three times that of men) and the fact that more than half of women held directorships in organisations with revenue of less than $5 million per year.” 

The survey also revealed pay variences depending on whether the company was New Zealand or overseas owned, and public or private. 

A non-executive director of an overseas owned company has a median fee of $63,000 – more than double that of a non-executive director of a New Zealand company at $28,750. 

The median fee for a non-executive director of an SOE was $35,200 compared to $62,750 for a private company, a difference of $27,550.

The insitute survey covered 1610 directorships and 994 organisations nationwide.

Respondents were largely professional directors who are members of their industry body.

“Director remuneration is not a straightforward issue. Many factors including risk, complexity, the industry, asset value, turnover and staff numbers all need to be taken into account when setting an appropriate salary for a director,” Mr Chivers says.

“This survey provides great analysis and insight which is invaluable to members of the governance community when they are considering board remuneration.”