When conversations turn to attracting board talent, organisations tend to reach for the same lever – pay more. It’s an understandable instinct, but increasingly, it may be the wrong one, writes remuneration expert Cathy Hendry.
The real challenge facing New Zealand boards isn’t simply whether director fees are high enough. It’s whether the governance system we rely on to attract and retain top talent remains fit for purpose in an increasingly complex and rapidly changing environment.
“Governance today is significantly more demanding than it was a decade ago…
Governance today is significantly more demanding than it was a decade ago. Directors must actively interrogate risk, understand technological disruption, navigate cyber threats, artificial intelligence and regulatory complexity, and provide oversight not only of financial performance but also reputational resilience.
Increasingly, boards need specialist expertise in areas such as digital transformation, sustainability and organisational change.
Governance failures attract rapid, visible consequences. Yet despite this shift, many organisations are still approaching board talent through a largely traditional lens.
Fees matter – but they’re not the whole story
The numbers are pretty telling. Only 41 percent of directors Strategic Pay surveyed in the past 12 months felt their fees appropriately reflected what the role actually demands – and in the public sector, that drops to around a third.
Most directors, in other words, feel governance is getting harder faster than it’s getting better compensated.
Cathy Hendry.
At first glance, the broader trend appears positive. Median non-executive chair fees have increased by around 31 percent over the past five years, while non-executive director fees have risen by a similar magnitude. However, that growth has been far from uniform.
Some sectors have seen significant increases. For example, wholesale, import and export, median annual chair fees have risen 60 percent since 2022, while director fees have increased 34 percent.
These organisations continue to rank among the highest-paying for governance roles, helping them remain competitive in attracting experienced board talent.
“The challenge is no longer just about demand. It’s increasingly about supply…
But simply increasing fees won’t resolve the underlying issue, because the challenge is no longer just about demand. It’s increasingly about supply.
A tightening talent pipeline
Experienced directors are serving on fewer boards than they once did. Where governance once supported broad portfolio careers, the intensity, complexity and liability of modern board roles is narrowing participation.
A large proportion of current directors sit within the baby boomer cohort, creating an inevitable succession wave over the coming decade. In a small market like New Zealand, that pressure is amplified by global talent flows — senior executives and experienced leaders moving offshore, into advisory roles, or stepping away from formal governance earlier than previous generations.
At the same time, the skills boards most urgently need – in artificial intelligence, cybersecurity and digital transformation – sit with individuals who are already highly sought-after executives, founders or global specialists. For these people, joining a New Zealand board is rarely a default decision.
They’re evaluating the quality of the opportunity, the culture of the board, and whether the role aligns with their values and professional goals.
Rethinking the governance value proposition
Answering it requires boards to think about governance in a fundamentally different way – not just as a cost to be managed, but as an opportunity to articulate what makes serving on them genuinely worthwhile.
This is especially true for the next generation of directors. Younger senior professionals enter leadership with different expectations – greater emphasis on flexibility, purpose and meaningful contribution, and less motivation from prestige alone.
Boards that assume future directors will be drawn by the same factors that appealed to previous generations may find themselves struggling in what is becoming a very different talent market.
Building for the future
The boards already responding well to this shift share some common traits. They invest in governance development through mentoring, internships and structured pathways that allow emerging directors to build capability before taking on full board roles.
They conduct regular board evaluations and maintain skills matrices to ensure composition stays relevant. They think strategically about succession, diversity and renewal, rather than waiting for a vacancy to prompt action.
There are encouraging signals. The gender pay gap among non-executive directors has narrowed sharply – from 5.9 percent in 2025 to just 0.5 percent this year – suggesting the governance market is actively rebalancing, even as overall complexity increases.
“If a highly capable future director was considering joining your board tomorrow, what would make them choose you…
But progress on equity doesn’t resolve the deeper structural question – are we building enough of the right governance capability for the decade ahead?
Fees will always matter. Remuneration needs to reflect the real weight of the role – the accountability, the expertise required, the time demanded. But it is only one part of a larger system.
The organisations best placed to secure governance talent in the years ahead won’t simply be those that pay the most. They’ll be the ones that can answer a more searching question convincingly – if a highly capable future director was considering joining your board tomorrow, what would make them choose you?
Cathy Hendry is the managing director of Strategic Pay NZ.
Main Photo by Bennie Bates on Unsplash
