Directors’ fees remain static
11 September 2013
Directors’ fees remain static
The Institute of Directors in New Zealand (IoD), in conjunction with dsd Consulting, has released its 2013 Directors’ Fees Report. The report is a key source of information on director remuneration trends in the New Zealand market.
IoD Chief Executive, Dr William Whittaker says, “The median fee for a non-executive director remained static over 2012 at $36,000, while the median fee for a non-executive chairman increased by 2.4% to $50,000. The survey highlights a sense of cautiousness in the market in regards to remuneration. Organisations are conscious of the need for transparency and accountability in the current environment and are taking a very conservative approach to fee increases.”
“There is a clear relationship between the type of organisation and the remuneration of directors. For example the average salary for a private company director is 2.5 times that of a not-for-profit director. This has real implications for the average remuneration for women directors overall. Women are highly represented on not-for-profit boards (42%) and under-represented on private company boards (13%) which directly contributes to the difference between the median remuneration for women and men ($25,000 vs $38,000),” says Dr Whittaker.
“The survey this year revealed a relatively conservative approach to both non-executive chair and director fee remuneration, with annual movements of 2.4% and 0% respectively,” says dsd Consulting Director, Una Diver. “This conservative approach mirrors that which we are seeing in remuneration for employees. There is a trend towards relatively small budgets, in the order of 3% per annum, and a move to managing budgets through focusing on rewarding high-performing employees.”
Ms Diver says, “Our observation of trends in the New Zealand and Australian markets suggests that boards are sharply focused on the management of risk within their organisations. Within remuneration practices this is playing out in areas as diverse as changes to performance management systems, the inclusion of risk-related measures in variable pay design and even the inclusion of risk management-related roles within executive teams. Our work with the IoD confirms that the risk-related aspects of governance remain a primary concern for New Zealand boards and it is interesting to see how this focus has translated into remuneration trends.”
“dsd’s strong partnership with the IoD enables us to produce a high-quality directors’ fees survey that is unique in the market because the respondents are professional directors who are members of their industry body and committed to their on-going development,” says Ms Diver.
“Setting appropriate remuneration for a director or chair involves the consideration of many factors, including turnover, asset value, complexity and risk. It is a complex issue and this survey is an invaluable tool when navigation remuneration issues,” says Dr Whittaker.
The survey covers 1,550 directorships and 991 organisations throughout New Zealand.
The attached infographic outlines some of the key findings of the report. The full report can be purchased from dsd Consulting - firstname.lastname@example.org