NZ directors" fees slipping, study says - 17th Aug 2015

Directors on New Zealand owned companies are slipping behind their overseas counterparts when it comes to their fees, a study out this morning shows.

The Institute of Directors Fees Report also indicated New Zealand non executive directors were spending much more time on their duties without their fees moving up by a corresponding amount.

IOD chief executive Simon Arcus said in 2014, New Zealand owned company director fees were on average 58% less than overseas owned companies. In 2015, they were 63% less.

Many variables needed to be considered when determining a fair and reasonable fee. Directors played a central role in the economic health of the country.

''Economies are about confidence. Directors are the backbone of that confidence. I am not afraid to say that directors are worth it. We pay directors to do the right thing, not the commercially safe thing.''

That could involve taking risks, he said.

New Zealand needed directors who were courageous but for whom the risk and reward balance in remuneration made sense.

The report showed director fees rose modestly in the year but workloads almost doubled, reflecting an environment where boards were facing more scrutiny and regulation than ever before.

The median increase in non executive fees rose by 4% but most (88%) had a median increase of 41% in time commitment, Mr Arcus said.

The right balance between risk and reward was critical to attracting skilled, competent and diverse talent to the board table.

There could be pressure on director remuneration levels in an era of increased liability and compliance. Members said the burden of compliance had grown, he said.

''What New Zealand needs is highly skilled, fairly remunerated directors. It's not enough to say there are plenty of directors lining up out there. New Zealand needs a focus on quality, not quantity.''

This was the first year the institute had worked with EY to undertake the annual fee survey and there was a 27% boost in survey participation, making it the most comprehensive.

Survey data showed only 50.6% of directors were satisfied with their current level of remuneration. EY partner Una Diver said diversity in the boardroom was another area where progress had been slow.

''There are good economic arguments for getting the right skill mix and gender on to boards. Research shows even one woman on a board can enhance its performance. It's time to see the diversity statistics improve.''

Thanks to Dene MacKenzie, ODT for this article

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