Pay rises for non-executive directors set to end

Pay rises for non-executive directors in FTSE 100 organisations are coming to an end following five years of steady increases, according to research by PricewaterhouseCoopers (PWC).

Its Non-executive director fees report found that base pay for non-executive director roles are beginning to plateau, as companies try to keep pay rises for executives and non-executives more in line with the rest of their employees.

The median base pay level for non-executive chairmen stood at £61,000 in 2013, a slight drop from £64,000 in 2012.

The average base pay for chairmen of a FTSE-100 organisation also remained flat, at £361,000 in 2013 compared with £360,000 in 2012.

This comes after a steady five-year rise in base pay. In 2009, FTSE-100 chairman received £300,000 in base pay, while non-executive chairmen received £55,000.

Pay in FTSE 250 organisations has continued to rise over the same period.

The report also found:

  • The median fee for a remuneration committee member has increased from £5,000 in 2009 to £12,000 in 2013.
  • The median fee for chairing a remuneration committee now stands at £20,000 per annum, up from £12,000 in 2009.

Fiona Camenzuli, partner in PWC’s reward team, said: “Many non-executive directors felt their pay needed to increase to reflect the time commitment and considerable reputational risk which now accompanies the role.

“Following five years of steady increases, our research suggests non-executive directors’ base pay has stabilised.

“As with executive pay, organisations are keen to show restraint in non-executive directors’ pay by ensuring any pay rises are not out of kilter with their wider employees.

“With average employees’ pay increases limited to inflation in many cases, it will be harder for organisations to justify a higher increase for non-executive directors.”