Non-executive director pay remains static in most countries across Europe

EXECUTIVE PAY

Non-executive director pay remains static in most countries across Europe

Executive pay restraint exercised across Europe is being reflected in non-executive directors’ fees, according to the latest report on the structure and remuneration of European boards from Hay Group.

Whilst pay practices are diverse for non-executive directors across the continent – particularly with respect to the difference in pay between chair and non-chair roles – NED fees typically remained frozen year-on-year in most countries.

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Key findings

• Median policy pay for NEDs saw no movement year-on-year in all countries included in the study, except Sweden where director pay increased by 5%.
• The median actual pay for non-chair directors across Europe rose slightly from €71,500 in 2011 to €75,200 last year.
• For non-executive chairs, median actual pay dropped from €237,900 in 2011 to €214,800 over the past year.
• Swiss chairs took home by far the most money last year (median of €1,077,100), whilst chairs in neighboring Austria earned the least (€51,600).
• This trend was reflected for general directors, who earned €251,200 in Switzerland in 2012, but just €20,500 in Austria.
• One factor that varies significantly across Europe is the differential between director pay and the pay of the chair of the board.
• Chairs of Italian companies are the most highly paid compared to other board directors, earning over five times the amount.
• Chairs of companies based in the Netherlands, by contrast, earn approximately 1.3 times as much as other board directors.

Median policy pay: the rates a company states it will pay NEDs for service on the main board and committees.

Actual pay: the total of fees paid out throughout the year, taking into account committees sat on, meetings attended, and any form of variable pay involved.

More women on boards, but significant pay gap persists

Finally, the Hay Group study shows that the representation of female directors on boards across Europe has improved slightly year-on-year, but the gender pay gap has widened on European boards, as women are still not being appointed to the top-paying, strategically important committee roles.

The pay gap between male and female board members is now 9% (broadening to as much as 22% in Italy), compared with 7% in 2011.

A final word

“The public, shareholder and regulatory pressures dampening executive pay inflation in Europe are clearly also influencing remuneration practices for non-executive directors on the continent’s boards.” - Carl Sjöström, director of executive reward for Europe at Hay Group.

Want to know more?

Title: Non-executive Directors in Europe, Hay Group, January 2013.

Survey details: The survey examined data at 390 companies from the major investment index for 12 countries, to provide a comparison of board composition and remuneration for large firms across Europe. All data has been collected from publicly filed sources, most commonly the annual report.
Hay Group chose to report most figures as median (rather than average). All European values have been converted to euros taking the exchange rate as of 31 December 2011.

Availability: To purchase a copy of the report, visit www.haygroup.com/uk/contact/Index.aspx.

Hay Group is a global consulting firm that “works with leaders to turn strategies into reality.” With 84 offices in 48 countries, it works with over 7,000 clients across the world. For more information, visit www.haygroup.com.