Here's what board directors are being paid

There is a sense boards need to attract and retain the right skills for more complex work since the pandemic began, the Institute of Directors says.
Dane Deaner/Unsplash
There is a sense boards need to attract and retain the right skills for more complex work since the pandemic began, the Institute of Directors says.

Fees for company directors are beginning to lift after many took a pay cut during Covid-19’s emergence last year.

Many directors voted to stop receiving or cut their fees as pandemic pressures and uncertainty descended on the companies they controlled.

However, the Institute of Directors' latest annual fees report shows that fees have begun to rise again.

The report, produced by with Ernst & Young, covered 1,768 directorships and 571 institute members in over 1,039 organisations.

READ MORE:
* Boardroom diversity benefits business
* Pay cut: NZ directors now earning at least median $219 an hour, survey shows
* Directors on council-controlled organisations get 14.1 per cent pay rise

Fees for non-executive chairperson went up with a bump, rising 7.9 per cent in the past year after three years of relatively stable increases.

Non-executive director fees also went up 7.1 per cent over the same period, with the median rising from $46,700 to $50,000.

RNZ
The Detail: From lockdown to recovery - tracking a small business during Covid-19 pandemic. (First published June 30, 2020)

Last year many directors had reported devoting more time to board duties, “often for reduced fees or foregoing payment altogether due to the pandemic,” the IoD’s general manager of learning and branch engagement, Dr Michael Fraser, said.

Now the fees were reflecting an inflationary catch up, or a perception that certain skills and experience were needed to manage increasingly complex and risky work.

Directors’ fees rose the most in property and real estate services, which Fraser said was unsurprising since housing and construction were key drivers of economic recovery.

Fees in that sector rose 10.3 per cent, followed by construction at 7.2 per cent.

Conversely, there were no fee rises for directors of companies in accommodation and food services, retail, administrative and support services, arts and recreation services, government administration and safety, mining, or wholesale trade.

Directors in the property and real estate sector had the biggest pay jump.
Danielle Cerullo/Unsplash
Directors in the property and real estate sector had the biggest pay jump.

Agriculture, forestry and fishing saw just director fee's rise by just 0.1 per cent increase.

NZX-listed, statutory boards and Maori entities reported stable director fees, while council-controlled organisations and not-for-profit boards saw increases of 4.8 per cent and 4.4 per cent respectively.

The number of hours directors reported working on average tailed back a little this year to 132, compared to 147 during 2020 and 127 in 2018.

Directors also mirrored the working practices of their employees with more ‘virtual’ meetings and pragmatic working arrangements.

Most had three directorships, one less than in the previous year.

Fraser said it appeared that the virtual workplace had made directors rationalise their commitments and that boards had become more efficient with their time.

Una Diver, of EY, said that, from the boardroom to the shop floor, the pandemic has radically changed perspectives around the how, when and where of work.

“The survey responses indicate that many boards have changed the way they meet,” she said.

“While Covid-19 has added to the complexity of governance, it has also presented an opportunity for organisations and people leaders to adapt their approach to some of the key risk areas in the people arena, such as skills and talent, capital and cost and workforce planning.”