2022 marks the 30th year of the annual publication of this survey, making it the longest running Directors’ Fees survey in New Zealand. We are thrilled to have reached this milestone and to have informed so many organisations over the years on director fee rates.
This last year has seen a bounce back in terms of economic recovery, however it is clear that not all sectors have experienced increased growth and consumer activity – the tourism and hospitality sectors are continuing to feel the pressure both in terms of consumer demand and staff shortages. Supply chain and talent shortages are also dramatically impacting most organisations. It is also clear that organisations are going to have to learn to live with the pandemic for some time.
All this increased risk and uncertainty has only added to the workloads of directors. Interestingly, the majority of directors indicated that risk management issues have been the biggest contributor to increased time commitment by boards. As a result, directors have noticed that they are spending less time on strategic planning, which the majority view as the area where boards should focus their time.
Last year, we noted a fall in fee levels over the previous 12 months, reflecting the impact of the pandemic. This year we have seen a return to positive movement, but only in the private sector. In the public sector, we have seen zero movement and, as a result, the overall general market figures are showing a median market movement of zero. In the private sector overall we have seen a 2.8% increase in fees. Listed organisations have seen a median market movement of 5.7% and there has also been strong market movement in the property investment/development and transport/freight and storage sectors (8.7% and 10.3% respectively).
As a result of the continued pay restraint in the public sector, we have seen an increase in the gap between private and public sector fees, and this gap in fees becomes more pronounced as the revenues increase. Given the challenges now faced by board members, the public sector may struggle to recruit and retain key talent into their boards.
Interestingly, the lower board fees within the public sector will also be contributing to the gender pay gap we see within the overall director fee database. While the public sector shows a far greater representation of female board members, these board members are paid significantly less than their private sector counterparts.
We have seen another small increase in the gender balance on boards as compared to 2021. Twenty four percent of Chairs and 38% of Directors (23% and 37% in 2021) are now represented by females. Central Government has the greatest representation of female directors; however, of note is the engineering sector which has an impressive 50% representation of female directors. The private sector has again improved its female representation on boards with an increase from 26% to 30% in 2022. There is a clear link between equal gender representation of board members and lower overall pay gaps within organisations. It is therefore encouraging to see the representation moving in the right direction.
Finally, in our discussions with Board Chairs over the past 12 months, we note that organisations now consider operating within a pandemic environment as the new normal. Moving forward we would expect director fees to continue to increase over the next 12 months. It will, however, be interesting to see whether the increased wage pressure and talent shortages will result in a relaxing of the pay restraint within the public sector.
Related: 30+ Years of Directors Fees Analysis