Company directors increasingly feel like their fees do not reflect the responsibility and value of their work, according to a new survey.
File photo. Photo: 123RF
The report from the Institute of Directors (IoD) and business advisory firm, EY, shows median non-executive directors' fees rose 3.1 percent in the past year from $50,000 to $51,529, compared with a 7.1 percent jump the year earlier.
The rise was below the 4 percent rise in the Labour Cost Index for the year ended June and was well down on the current rate of inflation, which sits at 7.3 percent.
Board chairs fared slightly better, with median fees rising 3.5 percent to $67,000.
The report suggested that many respondents did not think their remuneration reflected the value, responsibility or risk associated with director work.
Previous reports from the IoD have indicated that directors and officers of business, large and small, were facing heft increases in liability insurance.
EY people advisory services partner Una Diver said the role of directors had never been more important, given the increased scrutiny around compliance, the emphasis on worker wellbeing, and the focus on climate change.
"If they aren't paid appropriately, we'll struggle to attract the right talent to the sector and then everyone loses," Diver said.
IoD general manager of learning and branch engagement Michael Fraser said the more moderate growth in fees over the past years suggested a "rebalancing" after fees stalled during the first year of the pandemic.
"What we have seen this year is closer to what we saw before the pandemic - in 2019 the median non-executive director's fee rose 3 percent - so it may indicate a return to more normal times," Fraser said.
Non-executive directors were working less hours, with the amount of time spent on board matters falling from 132 hours in 2021 to 111 hours in 2022.
Fraser put the decline down to directors travelling less as they embraced new ways of working and the pandemic becoming less of a time-consuming issue for many organisations.
The report suggest that directors sat on a median of three boards and had about 10 meetings per year.
The pay-gap between male and female directors was narrowing, with the median pay for women increasing from $46,000 to $50,000, while men reported a drop in median pay from $53,000 to $51,700.
The report brought together data from 2,220 directorships held by 809 members of the IoD.