Clockwise from left: Cathy Quinn, Bruce Hassall, Julia Hoare, Scott St John, Mark Verbiest and Alison Gerry.
Nearly 300 directors sit on the boards of our biggest public companies, annually collecting more than $45 million in fees. Matt Nippert surveys the small print in NZX50 annual reports to identify the biggest – and biggest-earning – players in New Zealand corporate governance.
Directors’ fees have come under the microscope in recent months after stresses at Fletcher Building cracked New Zealand’s largest listed builder. Over recent years, the company has managed to marry one of New Zealand’s most generous budgets for corporate governance with one of its poorest returns for shareholders.
Its chief executive and three members of its board, including the chair, have resigned or taken early retirement in the past few months and increasingly loud questions have been asked about the quality of its corporate governance generally.
One of the few public voices on the quality – and cost – of corporate directors is the New Zealand Shareholders’ Association. Last year, the shareholder advocate presciently recommended its members vote against Fletcher’s proposal to increase its directors’ fee pool to become the largest on the NZX, despite the company then being only the 13th largest on the bourse.
Oliver Mander, NZSA chief executive, says the boardroom exits at Fletcher are evidence that quality matters and that change is coming.
“The story is far from over, and it would seem that feedback is taken seriously.”
Mander says the NZSA has done an analysis of board composition and fees across the entire NZX, and thinks governance quality – and the quality of its governors – is improving.
“The other thing in general we see is improvements in governance quality in New Zealand. We can see evidence of that improvement. Shareholders might not feel particularly good at the moment, given the performance of the NZX50, but this is a long-term view.”
Who is leading this improvement, and at what cost is it coming? To this end, the Herald has undertaken its first Directors Pay Survey in an attempt to map the mountains of New Zealand corporate governance.
All companies on the NZX50 (with Fonterra standing in for its shareholders’ fund) were included, using their most recent full-year annual report on June 20, 2024, to determine payments to independent board members. Given differing company reporting dates, the timeframes do not all match up precisely but the exercise gives a reasonable survey of directors’ pay in 2023.
One major blind spot is our four large Australian-owned banks. While required by Reserve Bank regulations to establish local subsidiaries with independent boards, this regulatory oversight doesn’t extend to transparency over local directors’ fees. This opaque pool is significant and obscures some of the highest-paid board positions in corporate New Zealand.
When ANZ appointed Sir John Key to its main board in Australia, as well as chair of its New Zealand subsidiary, the bank’s annual report disclosed the former Prime Minister was paid $461,733 in annual fees in the 2020 financial year to oversee its local operations. This figure, even ignoring three years of inflation and associated fee increases, is eclipsed in the current survey only by the chair of Fonterra (NZ$470,000 in fees).
The Herald survey of the NZX50 found a pool of 289 directors were paid $45.2m in fees during the 12 months in question. While this averages out at $146,333 per director, there is considerable variance. Chairing roles typically attract twice the fee rate of ordinary directors, and several dozen professional directors at the heart of corporate New Zealand hold multiple (in some cases up to four) listed board positions simultaneously.
Fifteen directors were found to collect more than $400,000 in fees annually, with most also occupying additional seats at unlisted companies, where director fees are not disclosed. Former PwC partner Julia Hoare – who during the period chaired the Port of Tauranga and served on the boards of A2 Milk, Meridian Energy, Comvita and Auckland Airport – sits clearly in first place after collecting $806,916 in fees.
Hoare, who took the jump into directing 12 years ago, told the Herald this week from a holiday in France that she was surprised to find herself at the top and modestly suggested a different methodology – including private companies, especially banks, and roles on SOE boards and large non-profits – would throw up different results and a different No 1.
“It’s a really interesting exercise you’re doing. But I think there’s probably quite a number of roles that people do that aren’t on the NZX50. So there are a whole lot of different ways to measure it. But I enjoy my space and I enjoy my roles.”
She enjoys them so much that last week she remotely attended a Comvita board meeting, European time differences be damned.
Veteran director Rob Campbell has previously chaired SkyCity, Summerset and Tourism Holdings and would likely have been in with a shot at medalling in this survey were it not for his recent (and, as it turns out, very short-lived) detour into the public sector chairing Te Whatu Ora. He is keenly aware of both the responsibilities and perks found inside corporate boardrooms.
Uniquely in modern workplaces, director fees are not set by management and instead are set by directors themselves, subject to shareholder vote. Campbell says the process to determine these, typically involving benchmarking with similar companies, has a net result can that be compared to a “gentle escalator upwards”.
He acknowledges this can appear to be an insular “people-like-us process” that ordinary workers are unable to avail themselves of during pay negotiations.
“No doubt, if you put director remuneration to those on the shop floor, you might get a different outcome,” he says.
“There has been a general drift upwards in the responsibilities that fall to directors in the last decade or so, and you could argue that those responsibilities justify additional reward for risk. Directors in practice offset that risk by engaging consultants, and engage insurance at the companies’ expense. So whether that increase in risk and responsibilities justifies an increase in directors’ fees is an open question.”
Mander and Campbell both agree that workload management, particularly for company chairs, is the key concern both board members and shareholders need to work through.
Mander says workload management often comes up when interviewing prospective directors, and he had a rough rule of thumb in determining how much is too much.
“We’d be worried if a director was sitting on six or seven public companies. That would certainly be more than a full-time job. A chair is a significant role and, as a general rule, we’d say that’s two roles.”
Campbell says the role of chair is “twice to three times the work of an ordinary director”.
“In my experience, the difference is immense and more marked than it probably seems from the outside. It’s not simply a matter of chairing the meeting, it’s a matter of the responsibilities that are often formally or informally delegated to the chair to handle between meetings: the kinds of person-to-person interactions between the chair and chief executive, and between the chair and various other stakeholders, be they investors or banks or journalists.”
The role of a director doesn’t come with a job description, or set hours, and problems can emerge when crises demand more attention than there are hours in a day, says Mander.
“The concern is, if you’re on three boards and you’re in a situation where all three are in crisis, you could easily be overwhelmed. We want to make sure the long-term quality of decision-making remains high.”
Campbell, having long served in the mahogany trenches, has a slightly smaller envelope than Mander. “I think we’ve all got different tolerances for pain and different tolerances for work. I think that, for me, five significant board roles was kind of an outer limit of what I could do effectively.
“But I wouldn’t do it now,” he says, laughing. “I’m in my mid-70s!”
The Herald Directors’ Pay Survey also casts fresh light on gender equity, showing some progress has been made, particularly at the top end of town.
While only a third of the nearly 300 NZX directors identified were women, the top cadre of professional directors has now achieved parity of sorts. Half of the top 20 highest-earning directors are women, including three of the top five.
Mander says there remain structural issues but the progress identified in the survey is real.
“Often directors are drawn from the ranks of former chief executives and, if you have a lack of women in those roles, it’ll flow through to the boardroom too.”
Campbell sees it similarly but notes other demographics haven’t yet caught the same tide.
“The trend in terms of gender equality at the boardroom is improving. I think that trend of Māori involvement is improving – still has a long way to go, but is improving. I think there are still significant issues for people from Pacific or other ethnic backgrounds to get governance roles. So you know, those are all still very much works in early progress.”
1. Julia Hoare – ($806,916 earned in fees from NZX50 companies during the survey period from a2 Milk, Auckland International Airport, Comvita, Meridian Energy and Port of Tauranga)
Julia Hoare spent two decades as a partner at advisory firm PwC before moving into directing 12 years ago and says her earlier experience has been a boon in managing multiple roles. “I probably had the advantage of juggling a number of clients at one time, so it makes it easier to move between different things,” she told the Herald this week.
Hoare has long chaired Port of Tauranga and also holds seats at Auckland Airport and Meridian Energy. She recently departed a2 Milk, where she was deputy chair, but quickly filled this gap in her future calendar by taking a seat with honey-maker Comvita.
Arguably the busiest professional director in New Zealand, she puts her appetite for board meetings down to her temperament and stage of life. “I’ve had a career working hard, and I enjoy it. I’m lucky now that my children are older and I’ve got a lot more flexibility.”
She too has noticed the increasing role of women on boards, and credits mentoring programmes run by the Institute of Directors that assisted her when she began directing. She is now returning the favour and doing similar work with other women entering the field.
“So I’ve gone full circle. You can do it, and I think it’s very much about paying things forward.”
2. Liz Coutts – ($675,666: EBOS, Oceania Healthcare and Skellerup)
After growing up on a farm in Matamata, Liz Coutts blazed a trail way back in 1991 to become chief executive – aged only 31 – of pulp and paper firm Caxton. From there she stepped out into the world of corporate directing, where her multiple decades of experience in boardrooms now see her a common pick for chair.
She currently chairs EBOS Group and Oceania Healthcare and recently stood down from the board of Skellerup. Her ranking here likely understates her influence given that she also chairs two other large non-listed companies not included in this survey: internet provider Voyager Digital and mobile phone upstart 2degrees.
Coutts says managing multiple board roles is a “specialist skill”.
“It’s not for everyone. It’s a lot of responsibility and a lot of liability. You do need to have the mental strength for it.”
She says the landscape, particularly for women, has changed markedly. “Even when I was at university, there weren’t a lot of women graduates. It’s changing, some would like it to change faster, but it’s a very different world from when I was first appointed years ago.”
3. Scott St John – ($668,900: Fisher & Paykel Healthcare, Fonterra and Mercury Energy)
A heavyweight boardroom presence, Scott St John retains his chair at Mercury Energy but has recently stood down from his board role at Fonterra, and chair of Fisher & Paykel Healthcare, to make room for his latest appointment chairing ANZ Bank’s New Zealand operations. The move is likely to reinforce his position on this podium. While fees for this role aren’t disclosed, his predecessor Sir John Key received more than $400,000 a year in the position.
St John told the Herald this reshuffling was a deliberate process he talked and planned through with his boardroom colleagues: “When you go through the appointment process, inevitably workload or bandwidth – whatever you want to call it – is actively discussed.
“It’s all very well balancing things when things are ticking along okay, but when there’s a crisis or something comes out of the sun – it might be Covid, it could be something else – it occupies you a lot more. You’ve got to have freeboard to allow you to deal with this.”
St John came out of corporate finance and into directing after a long stretch as chief executive of First NZ Capital and says the increasing demands on directors, particularly regarding liability – make the job more complex. “Whether it’s the climate change or disclosure regimes coming in, or the modern slavery conventions, there’s a lot of stuff coming down the pipe. It is complex and, as I say, so are the consequences of not getting it right.”
4. Bruce Hassall – ($651,131: Fletcher Building and Fonterra)
Chartered accountant Bruce Hassall is a former PwC partner who stepped down from running the advisory firm’s New Zealand operations in 2016 to become a professional director. He had chaired Fletcher Building since 2018 but, as economic stresses continued to rock the company, he brought forward his resignation from October to March. He retains a seat on dairy giant Fonterra and, after the Herald’s survey period, picked up a seat on Vector Networks.
Outside the listed sector, he has previously been a BNZ director and currently chairs The Farmers Trading Company and Prolife Food Group. His corporate biography cites extensive experience in “financial reporting, information system processes, risk management, business acquisitions, capital raising and IPOs”.
5. Cathy Quinn – ($620,501: Fletcher Building, Fonterra and Tourism Holdings)
Cathy Quinn trained as a commercial lawyer, moving up the ranks to chair Minter Ellison Rudd Watts and being a member of the Securities Commission for nine years, before retiring from the firm and taking her chair on the road. She currently chairs Tourism Holdings and is a director of Fonterra and Fletcher Building.
Outside the NZX50, she has a fascinating series of appointments including chairing Fertility Associates, directing Rangatira Investments and serving as pro-chancellor of Auckland University.
6. Robert McDonald – ($514,375: Contact Energy and Fletcher Building)
Rob McDonald presently serves as chair of Contact Energy, after first making it onto that board in 2015. His other NZX50 appointment, at Fletcher Building, began in 2018 but ends this week. Like Bruce Hassall, his chair at the embattled construction company, McDonald brought forward his planned retirement. He also serves on the board of ASX-listed vehicle leasing company FleetPartners.
McDonald spent the bulk of his earlier career at Air New Zealand, including 14 years as chief financial officer, before leaving to become a professional director in 2017.
7. Alison Gerry – ($493,697: Air New Zealand and Infratil)
Based in Arrowtown, and with an avocado business in Northland, infrastructure queen Alison Gerry has been on the board of Infratil for 10 years and assumed the chair there two years ago. She also picked up a directorship of Air New Zealand in 2021 and would likely rank much higher in this list if ANZ Bank disclosed how much directors of its New Zealand subsidiary (like Gerry) received. Outside the NZX50, she also has a significant presence in occupying the chair at high-profile retail share-trader Sharesies.
With training and an early career in corporate finance and trading, she worked in Sydney, Tokyo, London, Hong Kong and Singapore before resettling in New Zealand in 2021. Her previous appointments to boards have included Kiwibank, Spark, Wellington and Queenstown airports, and TVNZ.
8. Mark Verbiest – ($484,950: Freightways, Meridian Energy and Summerset Group)
A professional chairman with plenty of miles on his corporate clock, Mark Verbiest heads every NZX50 boardroom of which he’s currently a member. He is presently chair of Meridian Group and Summerset Group and only recently stood down from a similar position at Freightways. A lawyer by training, he worked as Telecom’s general counsel until 2008, when the company was broken up into Chorus and Spark. He then became a professional director and has since served as chair of Transpower, Spark and UDC.
9. Anne Urlwin – ($483,578: Infratil, Summerset Group, Precinct Properties and Vector Networks)
Professional director Anne Urlwin splits her time between Wānaka and Wellington and a bewildering range of board seats. In addition to seats on four NZX50 companies included in this Herald survey, she also serves on the board of dual-ASX-listed Ventia Services Group and mega public transport construction project City Rail Link. While she retired from the Summerset board in February 2023, she filled her spare bandwidth a month later when her seat at Precinct was upgraded to chair.
Urlwin has former chair experience overseeing construction giant Naylor Love Enterprise and the New Zealand Blood Service.
10. Peter McBride – ($475,808: Fonterra)
An odd-one-out on this list of multi-hatted professional directors, Peter McBride fills only one boardroom seat surveyed by the Herald. But as the chair of diary giant Fonterra, it is the best-paid, and arguably highest-profile, board position in the country and enough by itself to secure the farmer 10th place.
He was the long-time chief executive of Trinity Lands – the Open Brethren charitable kiwifruit and dairy empire – and now sits on the Trinity board after his transition from executive to governor.
A former chairman of kiwifruit exporter Zespri, McBride now also finds himself the independent chairman of Sydney Markets, a co-operative of fresh producer growers, wholesalers and retailers operating in the west of Australia’s largest city.
Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism - including twice being named Reporter of the Year - and joined the Herald in 2014 after having previously reported for business newspapers and national magazines.
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