The report, produced by the Institute of Directors in partnership with Ernst and Young, provided information on director remuneration in New Zealand for 2022.
IoD general manager learning and branch engagement Michael Fraser said the 3.1% growth in the median non-executive directors’ fee, from $50,000 in 2021 to $51,529, followed a 7.1% jump in 2021 which was a rebalancing after fees stalled in 2020.
Essentially, fees were frozen or any increases were very modest as a result of the pandemic. This year’s result was closer to what was seen before the pandemic; in 2019, the median fee rose 3% so it might indicate a return to more normal times, Mr Fraser said.
The report found most directors did not think their fees adequately reflected their responsibility and the value they contributed through their governance work.
There was considerable risk of personal liability and reputational damage associated with the role and environmental, social and governance expectations were evolving and increasing fast.
The concern about fees was most pronounced with state-owned enterprises, Crown entities and Maori land entities and there appeared to be similar issues with SOE directors, Ernst and Young New Zealand people advisory services partner Una Diver said.
That might be starting to be recognised in the marketplace as Crown entity directors received an average 8.3% increase in fees this year.
Mr Fraser said that likely reflected three important issues: the complexity of the public sector and the uncertainty of these roles, including their relatively fixed tenure; the potential for a gap in fee levels between the public and private sectors that needed to be closed; and the need to recruit and retain strong governance talent for Crown entities.
Chairmen and women were generally being remunerated at levels that reflected their additional responsibilities, although smaller organisations and certain sectors did not reflect that trend. Wholesale and retail trade and information, media and telecommunications had the smallest premium for chairs.
While women now make up 52.5% % of public sector boards, on average across all sectors only 31% of the directors surveyed for the report were women.
That imbalance was acute with non-executive and executive chairs (22.6% and 16.7% respectively are women).
Ms Diver said director fee levels and the rate of fee increases for women and men remained significantly different, but the gap was closing as more women took up higher-paying board roles.
"The median fee for male non-executive directors has risen 7.6% over the past four years, and jumped 32.8% for women. This has brought the 2022 average fees for each gender much closer — $51,759 for men and $50,000 for women," she said.
Looking ahead to the coming year, he expected the gender pay gap to continue to close, Mr Fraser said.
The nature of board work continued to evolve.
Sustainability committees were now more common, meeting with the same frequency as audit and finance committees, reflecting the importance many boards placed on sustainability considerations, and he expected that would also continue.
In tandem, he expected higher rates of uptake of liability insurance — already at record levels — as governance was a complex and risky area, Mr Fraser said.
As far as the governance community was concerned, he believed it was in good health with some "phenomenal talent" coming through.
