NON-EXECUTIVE DIRECTORS in the UK’s largest companies have seen a move towards annual fee increases in 2014, according to PwC.
FTSE 100 chairmen received a 3% increase in their fees in 2014 to £373,000 (from £361,000 in 2013), with non-executive directors saw a higher rise of 7% for their base fees to £65,000 in 2014 (from £61,000 in 2013).
Chairing the audit committee commands the highest additional fee of the NED roles in the FTSE 100 of £23,000, compared to £20,000 for chairing the remuneration committee and £15,000 for chair of the nomination committee.
Despite the fee increases, PwC predicts that the way non-executives are paid will change as companies move towards smaller annual fee increases and away from more substantial fee adjustments every two to three years.
This change is being driven both by new regulation and more companies wanting the way non-executives are paid to fall more in line with the wider workforce.
“The days of substantial fee increases every couple of years are over. A large number of the UK’s largest companies now have an annual review cycle for non-executive fees and are moving towards awarding increases that are more in line with any given to executives and wider employees,” said Fiona Camenzuli, partner in PwC’s pay, performance and risk team.
According to Camenzuli, a “step change” is needed in fees because non-exec roles have become more challenging, time-consuming and carry a greater reputational risk. “Finding the right people, with the right background and skills to navigate the increasingly complex environment can be tough and a premium will often have to be paid,” she said.
“It will be a balancing act for companies to reward non-executives for their increase responsibilities and the complexity of the role as the pace of regulatory change continues, while at the same time recognising pay increases for employees and executives.
According to Financial Director’s annual FD Salary Survey, the base salaries of FTSE 100 FDs fell 6.2%% to £478,592, while bonuses increased by 4.4%% to £554,264. Lower down in the FTSE 250, CFOs saw their salaries jump 5.4% to 315,085, while bonuses increased 9.9%% to £307,188