Directors want more cash to compensate for higher workload
Directors are demanding more money to compensate for longer hours and greater personal liability risks.
The Institute of Director's annual survey of directors' fees and professional lives, published on Monday, shows the median increase in director pay has been 4 per cent.
While that is above the average pay increase for workers,, directors' hours have increased by 41 per cent in the past year, according to the institute
Institute chief executive Simon Arcus said the spiralling workload was a result of significant law changes in areas including health and safety, and financial markets conduct.
Where there is more risk, directors expect more reward, he said
"We think there could be pressure on director remuneration levels in an era of increased liability and compliance. Our members tell us the burden of compliance has grown."
New Zealanders should not be against director pay rises, he said.
Taxpayers and KiwiSavers should want skilled directors on the boards of state-owned enterprises and listed companies to give them a better chance of prospering, Arcus said.
The greater workload of each directorship also limited the number of boards a director could serve on.
Male directors continued to out-earn their female counterparts.
Female directors' fees were a median of $8000 lower than the median fee of a male director - $37,000 compared to $45,000.
Women also made up just 22.4 per cent of the directors in the 1326 organisations surveyed.
That was down from 23.9 per cent on the previous year, but the sample size of the survey increased by 27 per cent this year, so the two years' figures are not directly comparable.
Arcus said the gender pay gap was an issue that needed to be tackled.
However, the gap was partly due to women directors being more likely to serve on the boards of not-for-profits, which generally paid less than than companies, or paid nothing at all.
Boards were facing more scrutiny and regulation than ever before and more personal liability, Arcus said.
EY partner Una Diver said the relatively modest increase in directors' fees was a concern.
"We know the regulatory landscape is changing significantly, meaning it is critical that people with the right mix of skills are attracted to governance roles."
Arcus said the 41 per cent increase in hours spent on each directorship, including an average of eight board meetings a year, was not the result of getting used to new laws, and that the effort required would not drop once those laws were bedded in.
"We are living in more dynamic and volatile times.
"The volatility and atmosphere of change won't be going away."
The increased workload was causing a groundswell of calls to be paid more.
Diver said just over half of directors were satisfied with their current level of remuneration,
Diver and Arcus said there was still much work to be done on diversity in the boardroom, which was critical for the success of companies.
It was not only gender but ethnicity and age where gains needed to be made, they said.
The Institute of Directors-NZIER Director Sentiment survey of current serving directors showed 64 per cent agreed diversity was a key consideration in making new appointments.
Maori and Asian directors both remain rare, with Maori making up just 4.7 per cent of directors while Asian directors represent just two in every thousand directors.
Diver said: "Research shows even one woman on a board can enhance its performance. It's time to see the diversity statistics improve."
Overseas-owned companies, often much larger than New Zealand-owned companies paid much better, with media director fees of $99,625 compared to $37,000 for New Zealand-owned companies.
The median fee for state-owned-enterprises paid was $29,000 compared to $78,570 for a private company listed on the stock exchange.
Arcus said: "In 2014 New Zealand-owned company director fees were on average 58 per cent less than overseas-owned companies. In 2015 it is 63 per cent less."