Lower pay rises for non-exec directors

Non-executive directors received lower pay rises last year, according to a report released by PriceWaterhouseCoopers (PWC).

The PWC annual guide on Non-executive director practice and fees, released today (August 18), shows that pay increased by 15.6% in 2007/08, compared with 16.7% in 2006/07 and 25% in 2005/06. 

The report highlights that companies are becoming increasingly concerned about corporate governance and board effectiveness. Out of the 155 companies that provided information for the report, 84% have conducted an annual performance reviews of their executive boards.

According to the report the trend of awarding non-executives with large fee increases due to their level of responsibility is slowing. This is despite the fact that the average director’s time commitment has risen from 15 days in 2003 and 20 days in 2007 to 21 days in 2008.

Sean O’ Hare, partner at PWC, said: “The rate of fee increases is levelling off as non-executive directors and the boards that employ them are working harder to balance fees with responsibilities that come with the role. We’re seeing much more emphasis on reviewing fee structures and levels – over half the companies we surveyed had carried out a review in the last 12 months. Historically non-executive directors’ fees were reviewed every three years so this increasing frequency signals a significant shift.”