Directors' fees jump 9pc, survey shows

Directors' fees have risen by up to 9 per cent in the past year, according to a survey of more than 200 businesses.

The Moyle Consulting survey shows although 80 per cent of organisations made no change to fees, the remainder pulled up the median.

The increases come despite profits falling in many sectors, although Moyle Consulting director Jarrod Moyle said directors continued to be under-rewarded for the responsibilities and workload they bear.

Pressure on businesses had increased the workload for most directors, he said.

Problems were proving more demanding of directors' time for 28 per cent of the organisations last year, compared with 21 per cent in 2008.

The survey was of 226 public-sector, private, listed-company and not-for-profit organisations.

The increases take the median annual base fee for non-executive directors to $32,655, up from $30,000 a year ago. For chairs, the median annual base fee is now $58,375, up from $54,000 the previous year.

"The percentage moves in some cases may be high, but they are off very low dollar levels," Moyle said.

Shareholders Association chairman Bruce Sheppard said good directors were underpaid but as few as one in 10 directors fell into this group. Most others were "head nodders" or "habitually stupid" and were not worth paying at all.

"The remuneration is what it is - if they were all good they would be underpaid but they're not all good."

Shareholders should not look at the level of fees paid per director but at the total pool of fees paid relative to risk and growth, he said.

Boards were largely made up of risk-averse old men while those who invested money in businesses were prepared to take risks and wanted to see wealth created.

This gap needed to be closed with the injection of younger directors, Sheppard said.

Moyle senior consultant Sherry Maier said compared with same-sized organisations in Australia, there was a gap of 50 per cent to 130 per cent in fees.

"The gap does need to narrow."

She said the the survey highlighted a flaw in remuneration practice.

Many organisations did not review fees annually, instead waiting three or four years and finding themselves in a catch-up situation, where large percentage increases were required.

"We suggest it would be much better to make small changes every year."

BASE RISE
* Non-executive directors $32,655, up from $30,000 a year ago.
* For chairs $58,375, up from $54,000.
* Time per directorship has increased about 15 per cent.