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Non Executive Directors pay rises reportedly outpace CEO pay rises

Non Executive Directors pay rises reportedly outpace CEO pay rises

August 7, 2017 12:22 PM | Print this page

Egan Associates has released a report into the remuneration of nonexecutive directors (NEDs) from the ASX 300 and NZ top 50 companies over the most recent five-year period, including data up to the financial year ending in December 2016.

For the purposes of the report, NED remuneration includes:

  • retainer fees;
  • committee fees;
  • superannuation contributions (primarily for Australian headquartered companies); and
  • the fees set aside to purchase/allocate equity (where appropriate).

All of these elements are considered as remuneration of NEDs under the ASX Corporate Governance Principles. Retirement benefit accrual is excluded.

Key findings from the research include:

  • Increases in NED remuneration has outpaced growth in annual CEO remuneration and the wage growth of the average earner. The market has significantly outperformed all wage increases.
  • Fee increases for Chairpersons has restored ratios between chairpersons and NEDs.
  • Median committee fees are higher in 2016 than the previous years. There has also been an increase in the number of committees per company for two of the four ranking groups.
  • Growth in NZ Director fees was more moderate this year, although the cumulative growth appears to have provided a greater uplift over a number of years than that experienced by Australian Directors.

Commenting on the report, The Australian highlights as significant the fact that the research shows that NEDs have enjoyed bigger pay rises than chief executives in recent years, due to increasing workloads for boards and the greater complexity of committee work and that a top 50 chairman’s salary is now almost 2.5 times that of a standard director.

[Sources: The Australian 02/08/2017; [registration required] Egan Associates The KMP report Issue 18: Non-Executive Directors' Remuneration ASX Top 300 and NZ Top 50  July 2017]


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