Director gender pay gap closing but workload rises
The pay difference between male and female directors has more than halved since 2015 but it is still not closing fast enough, EY partner Una Diver says.
At the same time, the Institute of Directors believed directors overall were not paid enough, and the importance of good governance and how its role had changed was not widely understood.
The Institute of Directors’ latest report on director fees found nonexecutive director fees were up 2.3 per cent from last year, to $44,000.
Chair fees increased $1000 to $55,000, while the difference between male and female non-executive director pay was down to 9.9 per cent.
In 2015, the disparity had been 21.6 per cent.
EY partner Una Diver said the closing gap reflected more women directors getting onto larger boards, rather than more boards paying male and female directors the same.
Furthermore, more women were getting paid committee roles at companies on top of just being on the board.
‘‘Yes the gap is closing, it’s probably not closing fast enough though.
‘‘There is still a need to look at diversity, not only male versus female, but actually across the wider view of diversity.’’
Institute of Directors chief executive Kirsten Patterson said it was pleasing the gap was closing, but New Zealand’s director fees remained low by international standards.
Increases to fees had roughly kept pace with inflation and general wage growth, she said, and there was a perception directors were overpaid.
‘‘But it’s not outstripping any of the other markets, in fact it’s probably behind.’’
Diver said there was not a good understanding of what represented value in governance and how it should be valued.
The complexity of governance roles was also not well understood here, and how the environment had changed significantly recently.
Regulatory changes, new frameworks such as the New Zealand stock exchange’s corporate governance code, and changing views of who stakeholders were, all meant director workloads were increasing.
‘‘All of those things have had a real impact on director roles and yet fees, the rate of change, is slower than even the rate of salary change.
‘‘Boards will now be considering their remuneration levels, and whether these are fair and realistic, given the higher levels of compliance and increased exposure to risk directors are facing.’’
Diver said that year on year the workload had not increased that much, but it had changed markedly over the past seven years EY had carried out the survey.
A key part of this was an expectation of more engagement by board members with shareholders and stakeholders.
Patterson said this could range from visiting the workplace to meeting shareholders and regulators.
Businesses were increasingly being expected to lead societal and cultural change, she said, which meant complex issues were landing on the board table.
This year’s survey was the third between the Institute of Directors and accounting firm EY, and surveyed more than 2300 directorships across 1627 organisations.