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Director fees on the up – male-dominated boards continue to reign

Director fees are on the up but still tracking below pre-recession levels – and boards are still failing in the female representation stakes.

Director fees are on the up but still tracking below pre-recession levels.

A Moyle Remuneration Consulting study found a median increase of 11.1 percent in fees for non-executive directors last year, while median chair fees rose 12 percent.

Just under half of respondents reported an increase in fees, compared with 40 percent the previous year. The increases are still running below the 15-20 percent levels seen from 2004-2009, however.

The typical director earned a median $34,429 in base fees, with chairmen receiving a median $63,355. Those in the construction and property sectors were the most well-paid, while those in education commanded lower rates.

"While it seems director fee increases are back on the agenda for more boards, in an uncertain economic environment with a high degree of public sensitivity, most organisations were conservative and chose to adopt modest increases in board fees," said Moyle director Jarrod Moyle.

Unlike pay for executives, director remuneration is often reviewed every two or three years, with several businesses reviewing board fees for the first time in five years .

The result of waiting so long between increases means that boards are often required to make large catch-up increases of  as much as 30 percent to stay in line with the market, Moyle said.

"It would be preferable for boards to review fees annually – as for executives – and make smaller, incremental adjustments to reflect market movements."

Moyle said director remuneration generally consisted of base annual fees, although senior consultant Sherry Maier noted an increasing reliance on separate committee fees, which 42 percent of organisations reported paying.

Although approved pay increases may generally align with overall company results, pay for performance in the form of bonuses or large step increases of base fees is not common at board level in New Zealand or any other relevant market.

Moyle has tracked director remuneration for the past seven years. In 2005 listed company directors were paid 1.4 times the median fees paid to their counterparts in public-sector organisations. This has risen to 1.96 times in 2011. Privately-owned businesses pay median fees 1.3 times the public sector.

Meanwhile, the latest research from executive recruiter Korn/Ferry shows there has been no improvement in female board representation since last year; 65 percent of New Zealand company boards are male-only. That's more than twice the number of male-dominated board in Australia, and more than in India, Malaysia, Singapore and Hong Kong.

Just 3.4 percent of executive directors are women, while 11.4 per cent of non-executive directors are female and 8.5 percent of independent non-executive directors.

The survey found female directors generally had shorter tenures and were three years younger on average than their male counterparts, and more likely to hail from a law or accounting background than science or engineering.