Gender pay gap narrows for NZ directors - report

Institute of Directors chief executive Kirsten Patterson. Picture/Supplied.

The gender pay disparity between male and female non-executive directors in New Zealand has reduced by more than half over the last three years, according to the Institute of Directors.

The institute said in a report that the gender pay gap came to 9.9 per cent in 2017, down from 21.6 per cent in 2015.

Kirsten Patterson, the institute's chief executive, said there was a need for more diverse boardrooms.

"The challenges of disruption and the modern world, call for modern and diverse boardrooms," Patterson said. "So it's pleasing to see that the gap between male and female non-executive director fees continue to close."

The institute's directors' fees report, produced with professional services firm EY, showed non-executive director fees had a moderate increase to $44,000, up 2.3 per cent from $42,994 last year. For non-executive chairs the median fees increased to $55,000 this year from $54,000 a year ago.

Patterson said there were skills required of directors emerging now that were not there five years ago, including cyber skills, increasing the scope of risk oversight by boards.

"There is also more expectation, especially from institutional investors, that boards must play an increasingly meaningful and prominent role in shareholder engagement that extends beyond general meetings," she said.

"And although boards must now be more transparent around fees, it is just as critical that fees remain competitive to attract good directors, to deliver on these shareholder expectations," she said.

At just 18 per cent, women remain under-represented on NZX company boards, she said.

EY partner Una Diver said the risk and compliance landscape for directors was likely to change significantly in the next 12 months as boards get to grips with the NZX's new corporate governance code.

The code, which mandates higher standards of transparency and disclosure in areas such as director and CEO remuneration, auditing and health, and safety monitoring, will inevitably increase directors' workload, she said.

While there had been progress, she said more needed to be done to achieve greater diversity on boards, she said.

"If we look at the diversity statistics beyond just gender, it is very clear that that sample group is still underweight Maori and Asian representation especially, as well as females," she said. "When you lack the diversity that is inherent on the streets of our major cities, there is still a way to go to reflect that in the boardroom," Diver said.

Boards will now be considering their remuneration levels, and whether these are fair and realistic, given the higher levels of compliance and increased exposure to risk directors are facing, Diver said.

The survey covered 2,348 directorships from 1,627 organisations.