This year marks the 30th anniversary of the Strategic Pay Directors’ Fees survey, which is also the longest running survey of its kind in New Zealand.
A statement from the company says the survey has provided many insights into changes to directors pay and workloads over time, providing an historical yardstick for progress. In 1991 when the survey began, chairs were still referred to as chairmen. Gender differences only began to be tracked and analysed in 2013.
Strategic Pay says that since then, while there has been far greater female representation on boards (female chair representation doubled from 12 percent in 2013 to 24 percent in 2022, with female directorships increasing from 24 percent to 38 percent in the same time frame) the pay gap for chairs nearly doubled between 2020 and 2021.
In 2020, chairs had a gender pay gap of 12 percent, while for directors it was 21 percent. In 2021, chairs had a gender pay gap of 23 percent, and 22 percent for directors. Strategic Pay says this suggests that women are likely to be on boards with lower fees.
Managing director Cathy Hendry says the public sector is doing a good job at encouraging representation between males and females, “but with that you are also seeing that they are also lower paying, which is having quite an impact on the median fees that you’re seeing paid out to chairs”.
After taking inflation into consideration, the median non-executive directors’ fee was $12,000 in 1991, rising to $40,000 in 2022 (78 percent). Between 2013 and 2022, the median fees for a non-executive chair rose from $65,834 to 75,000, and the median fees for a non-executive director rose from $34,000 to $40,000.
Working hours
The expected working hours of chairs and directors has also risen significantly over time. In 2013 chairs were expected to put in 171 hours, and directors were expected to put in 120 hours a year. In 2022 this jumped to 250 hours for chairs (46 percent), and 165 hours for directors (38 percent). Despite being expected to put in more hours, chair and director fees only increased by 14 percent and 18 percent respectively in the same period.
Prior to the pandemic, workloads for directors had been trending down. From 2013 to 2019, before Covid hit, chairs were expected to put in 12 percent less hours, and directors were expected to put in 20 percent less hours than in 2013.
“The report suggests that these board members are working harder but are willing to take pay cuts and freeze their fees. I think it’ll be interesting to see if there is a big bounce back given how hard they have had to work,” Hendry says.
The 2022 survey also shows public sector board fees stagnated in the aftermath of Covid
After dropping in 2021 due to the impact of the pandemic, this year’s survey shows directors’ fees have returned to positive movement in the last 12 months – but only in the private sector. There was zero movement in public sector board fees in the last 12 months, while private sector fees rose 2.8 percent. Public sector fees have been uncompetitive for several years now.
Listed organisations have seen a median market movement of 5.7 percent in fee increases and there was strong market movement in the property investment/development and transport/freight and storage sectors (8.7 percent and 10.3 percent respectively).
“When you consider the sector that’s had the biggest increases in fees over the last 12 months (listed companies and the private sector) you’re just not seeing the same coverage of female chairs there.
“You get paid the same fee regardless of whether you’re male or female – it’s where they’re sitting. And that’s something that we really need to encourage, because we know that if boards have got equal coverage of males and females in the board then it’s more likely to flow down,” Hendry says.
See https://www.strategicpay.co.nz
