Pay has reached a plateau for FTSE 100 non-executive directors – except for those on the committee that reviews pay policy.
Average annual compensation for chairmen of board compensation committees has risen 65 percent to £20,000 ($33,000) from about £12,000 in 2009, according to a PwC study of FTSE 100 companies. At the same time, average compensation for outside members of the compensation committee has risen 140 percent to £12,000 from £5,000.
The increases put the compensation for pay committee chairmen on a par with that of audit committee chairmen, PwC says. Compensation for audit committee chairmen remained unchanged for a third year in a row in 2013, at £20,000. Members of audit committees have had a cumulative increase of 50 percent since 2009, well below the gains of their counterparts on compensation committees.
‘It is clear that chairing the remuneration committee is now considered as onerous as chairing the audit committee,’ says Fiona Camenzuli, partner in PwC’s reward team, in a press release. ‘The intense spotlight on executive pay means the remuneration committee chair has an extremely difficult balancing act in setting pay levels that satisfy shareholders, company executives, the wider workforce and often the general public.’
The PwC study finds compensation in other areas of the board is also ‘beginning to plateau’ as companies seek to keep annual wage adjustments for outside board members more in line with the average increases for company employees.
The median base fee level for a chairman of a FTSE 100 company was £361,000 in 2013, almost unchanged from £360,000 in 2012. The median base fee for non-executive directors dropped last year to £61,000 from £64,000. The lack of a pay rise follows five years of rapid gains. In 2009, chairmen earned average compensation of £300,000 while other non-executive board members earned £55,000.
‘Our research suggests non-executive directors’ base fees have stabilized,’ Camenzuli says. ‘As with executive pay, companies are keen to show restraint in non-executive directors’ pay by ensuring any pay rises are not out of kilter with their wider employees.’
