Companies searching offshore for directors

AUSTRALIAN companies are looking further afield for skills and a diversity of views on their boards, with a quarter of ASX200 directors now based overseas.

But a traditional approach to fees means homegrown businesses risk missing out in the global war for director talent, according to KPMG.

The current approach to ASX director fees comprises an all-in-one chairman fee as well as base member and committee fees across the remaining non-executive directors. These are benchmarked against an ASX group regardless of where directors are based or the fees they could attract in their local markets.

While ASX boards have to date been able to attract international directors with this typical remuneration structure to date, the “one-size-fits-all” approach may hinder efforts to recruit in certain markets, particularly the US, KPMG remuneration consulting partner Ben Travers said.

“In some markets, such as the US, fees for non-executive directors are materially higher than what is observed domestically,” Mr Travers added.

According to data house Equilar, the median director fee in the US in 2021 was $US270,000 ($362,027) across the top 500 publicly listed companies.

In contrast, Australia’s two largest companies, BHP and Commonwealth Bank, offered board base member fees of $214,535 and $242,000 last year.

Another big drawback in the local market is the absence of options as part of a remuneration package, Mr Travers said.

In the top 500 public companies in the US, 65 per cent of non-executive director fees were paid in equity last year, according to Equilar. In contrast, fees in Australia are generally paid in cash, primarily due to shareholder approval requirements.