FTSE 100 non-executives fees increase at lowest rate for more than 15 years

Published at 00:01 AM on 25 January 2016

Non-executive directors in the UK’s FTSE 100 companies have seen a fall in the size of fee increases, according to PwC’s annual non-executive director report. In 2015 the median non-executive director base fees increased by 3%, compared to a 7% increase in 2014, resulting in the lowest median fee increase since the survey started in 1999.

In 2015, two thirds of FTSE 100 companies conducted a fee review and of these, around 50% made changes to base fees. There is currently a stabilisation of fee levels, as companies move away from substantial fee adjustments every two to three years in favour of smaller annual fee increases. However, given that a number of the FTSE 100 still carry out a review less frequently it remains to be seen whether this trend will persist.

PwC’s research reveals that the base board fees for non-executive director roles in the FTSE 100 have slowed down after significant rises in previous years, as companies try to keep pay increases for executives and non-executives more in line with the wider workforce.

Fiona Camenzuli, partner in PwC’s Reward & Employment team, said:

“The 2015 data suggests that there has been a conscious decision to align practice for NED fee increases with that of the executive team and the rest of the workforce, through more gradual fee increases. The environment has changed and Boards are mindful of the broader debate on fair pay and the likely impact on their reputation and brand. Although it remains to be seen if this trend continues when companies review fees in 2016.

“Increasing pressure of the role could still impact fees in the future. The huge increase in risk and regulatory requirements in recent years has led to many non-executive directors dedicating far more time to the role to properly fulfil their duties. We estimate that a non-executive’s working days has now increased from around 20 days to closer to 30 days per year. With these factors likely to impact the availability of talent, companies may need to pay more to reflect the time commitment and considerable reputational risk which now accompanies the role. But at the same time, our experience is that non-executive directors take on the role for a number of reasons, pay typically being fairly low down the list.”

The number of female FTSE 100 non-executive directors continued to rise this year to 29%, almost doubling in number since 2010. This progress in the gender balance of non-executive directors is not replicated for executive directors. Female board directors make up 11% of roles and there are only five female CEOs in the FTSE 100.

Fiona Camenzuli, added:

“Non-executive directors are leading the way in reaching the 33% gender split now recommended by the Davies review. However, this brings into sharp focus the need for companies to follow this trend with their executive boards, where diverse leadership can make a significant difference to the business management. The pressure is on companies to grow and invest in their own female talent for executive roles and companies should look to harness the success of female non-executive directors, sharing knowledge, skills and attributes to strengthen the pipeline of women in leadership.”

Ends.

Notes for editors.

PwC’s non-executive director fees report is based on information from FTSE 100 companies reflecting data from annual reports published during 2015.

The median base fee level for FTSE 100 chairmen was £393,000 in 2015, up 5% from £373,000 2014, For FTSE 100 non-executive directors the median base fee level stayed consistent with 2014 at £65,000.

Ends.

For more information email [email protected] / 07803455542


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