Attracting top directors tougher at present pay rate
NEW ZEALAND company directors are underpaid and the low pay is affecting the quality and diversity of people willing to sit on boards, a high profile independent director says.
Sandy Maier, who currently holds a dozen board positions including four chairmanships, told a gathering of chief financial officers in Auckland yesterday that Kiwi directors were paid a third less than their Australian counterparts, after adjustments for size and risk. ‘‘There’s no reason for it.’’ The low fees meant there was a relatively small pool of people willing to take on directorships.
‘‘You can always find somebody in line, but somebody who’ll do something for cheaper is prob- ably not a good thing,’’ he told the annual CFO Summit.
New Zealanders viewed directorships as an honorarium or retirement position. ‘‘The thing starts to look like jury duty.’’
But it meant the same 150 or so people made themselves available, and attracting the next 150 was the problem.
Maier, a former CEO of South Canterbury Finance, was on a panel with other directors including Mighty River Power chairwoman Joan Withers and Vector chairman Michael Stiassny.
Withers said directors got paid 50 per cent less than they would if they were in a top executive’s role, and many business people were not willing to take that kind of a pay cut. The directors spoke about the impact of prosecutions taken against directors in high profile company collapses such as Centro in Australia and Feltex here.
The expectations on directors were increasing, Withers said.
As the first state-owned enterprise to be put up for partial sale, the Mighty River board was acutely aware of the issue.
The additional responsibilities would lead to directors taking fewer roles, and the question was whether the market would recognise the need for directors to limit their appointments and remunerate them accordingly, she said.
Executive remuneration specialists Moyle Consulting said New Zealand directors earned a median $34,429 in 2011, and $44,000 if based in Auckland. Chairs earned a median $63,355.
This was a quarter to a third of the fees paid to an Australian director in a like-sized organisation.
Just under half of directors received a pay rise last year. The median increase for non-executive directors was 11.1 per cent and 12 per cent for chairmen.