KEY POINTS:
New Zealand directors are paid far below their Australian counterparts, despite receiving a healthy increase over the past year, according to a survey released today by personnel consultancy Sheffield.
The fee increases directors awarded themselves in the last year were far in excess of most contracts they awarded
their workers.
The median base fee paid to non-executive directors increased 15.6 percent to $27,861, while board chairs received a median increase of 14.3 percent to $52,000.
Statistics New Zealand's figures showed overall salary and ordinary time wage rates rose 3.2 percent in the March year, marginally above the rate of inflation.
Across its database of 259 organisations, Sheffield found directors in comparably sized businesses in Australia were receiving 50 to 150 percent higher fees than their New Zealand counterparts.
In addition, the great majority of Australian firms offer share purchase or share option schemes as well as generous superannuation benefits.
Sheffield consultant Sherry Maier said this year's fee increases were around three times last year's.
The gains were at a time when virtually no increases were received by directors on the boards of almost 50 state and crown entities, which suggests the private sector was making even more dramatic moves, she said.
She said she was puzzled by the gap between the fees here and in Australia.
"Surely, nobody believes that Australian directors are working twice as hard, face twice the liabilities or are making contributions twice as valuable as their New Zealand counterparts in similar-sized businesses."
She said New Zealand directors had a different profile than their Australian counterparts.
"Unlike Australia, where a professionally trained, highly selective and well-paid director class has developed largely from corporate origins, New Zealand has traditionally tended to rely more on a large and steady supply of partially retired individuals who enjoy the involvement and service aspects of serving on boards, but who are generally not wholly reliant on the income.
"Such individuals are less likely to exert pressure to raise board fees to more appropriate and competitive levels," she said.
Ms Maier said the big gap contrasts with the gap in remuneration paid to executive directors, which was inconsequential.
"The often-cited 20 percent to 40 percent pay gaps with Australia do exist at general staff and middle manager positions, but we find that with Trans-Tasman executive mobility, such gaps have largely eroded for top corporate jobs."
She said there was no justification for paying executives highly competitive salaries and not the non-executive directors.
Ms Maier said the survey also found the time commitment and workload expected from board members had increased, with 78 percent of boards now meeting monthly, up from 65 percent a year ago.
Additionally, the typical median time commitment involved in a single directorship was 29 days a year, up from 25 days a year ago, with chairs' time reported as about double that.
Ms Maier says that consistent with past surveys, 75 percent of all respondents indicated growing risk exposure involved in directorships over the past five years, with 26 percent reporting they had had a negative experience in just the past year.
She said boards were increasingly under media, shareholder and stakeholder scrutiny and operated squarely in the public spotlight. "Everyone can easily name high profile cases where board performance and judgment has been called into question."
Only 17 percent of non-executive directors and 6 percent of board chairs were female, although in the public sector nearly a third of directors were female.
- NZPA
