‘Is three per cent the new black?’

3 October 2012
Media Release

‘Is three per cent the new black?’

The Institute of Directors in New Zealand (IoD) in conjunction with dsd Consulting have released their 2012 Directors’ Fees Report. The report is a key source of information on director remuneration trends in the New Zealand market.

“This year’s survey highlights a number of interesting remuneration trends”, says IoD Chief Executive, Ralph Chivers. “The median fee for a non-executive director increased by 2.9% to $36,000, while the median fee for a non-executive chairman increased by 15.3% to $48,834. The significant variance between the respective increases is partially related to the survey sample, but it also reflects a trend towards addressing the premium paid to the chairman. In an environment where boards are facing more scrutiny and regulation than ever, there is a greater recognition of the responsibility and risks taken on by the chair.”

“The survey has also given us greater insight into the role of women in governance. While there was a significant difference between the median fee men and women received in their role as a non-executive director ($39,553 vs $24,500), there was nothing to indicate that this is reflective of women being paid less for doing the same job. The variance is reflective of the significant representation of women on not-for-profit boards (three times that of men) and the fact that more than half of women held directorships in organisations with revenue of less than $5 million per year,” says Mr Chivers.

“The 2.9% movement of non-executive director fees in the IoD Survey is consistent with the median actual and forecast movement in remuneration across all career levels in the dsd database (3%),” says dsd Consulting Director, Una Diver. “The fact that 3% is consistent across all sectors and all career levels from the shop floor to the boardroom is, in itself, a significant finding. It shows a degree of conservatism towards executive remuneration which has, traditionally, increased at around 5% per annum. These more conservative budgets, with a focus on equality across all career levels, appear to be a feature of the ‘post GFC landscape’, which begs the question – is 3% the new black?”

“The IoD survey is of a very high quality, it stands out from many others as the respondents are largely professional directors who are members of their industry body. As such, it is an incredibly valuable resource for directors, boards and the wider business community,” Mrs Diver says.

“Director remuneration is not a straightforward issue. Many factors including risk, complexity, the industry, asset value, turnover and staff numbers all need to be taken into account when setting an appropriate salary for a director,” says Mr Chivers. “This survey provides great analysis and insight which is invaluable to members of the governance community when they are considering board remuneration.”

The survey covers 1,610 directorships and 994 organisations throughout New Zealand. The attached infographic outlines some of the key findings of the report. The full report can be purchased from dsd Consulting - surveys@dsd.co.nz.

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