Non-executive directors Practices and fees

Size: px

Start display at page:

Download "Non-executive directors Practices and fees"

Dorthy Webster
6 years ago
Views:

1 Non-executive directors Practices and fees Martin Hopkins, Premier Corporate Governance Conference 2014

2 Agenda Introduction Business unusual for NEDs Time commitment The profile of a NED Chairpersons fees NED fees 2

Introduction We will consider issues facing NEDs as well as trends in fees paid Data focuses on 358 (373) JSElisted companies and is based on publicly available information as at 30 November 2013

3 Introduction We will consider issues facing NEDs as well as trends in fees paid Data focuses on 358 (373) JSElisted companies and is based on publicly available information as at 30 November 2013 Total fees paid split between chairpersons and NEDs Analysis by reference to market capitalisation of companies as well as four main industries financial services, basic resources, industrial and services 3

Business unusual for non-executive directors In prior years we focussed on the increasing regulatory and risk landscape leading to greater personal liability for NEDs Current year we deal with the

4 Business unusual for non-executive directors In prior years we focussed on the increasing regulatory and risk landscape leading to greater personal liability for NEDs Current year we deal with the issue of organisations evolving into purpose-driven organisations Are our local NEDs equipped for this? Are they fit for purpose? The number of NEDs has declined to 2,204 (2,294) Quality rather than quantity is now the issue 4

5 Shift has happened Who are the stakeholders? What is purpose-driven? Examples (Apple, IBM, Google, Safaricom, FNB ) 5

6 TIMMS framework 6

7 Are our directors ready to tackle their new roles & responsibilities? Knowledge, skill resources, diversity and the ability to apply these skills effectively is paramount to deal with modernday boards and their challenges Time commitment? Adequate skill? 7

8 Number of NEDs Number of directorships (excluding subsidiary companies) Time commitment Membership of multiple boards Number of directorships Number of NEDS Number of boards Number of directors Number of companies 8

9 Adequate skills? s 2013 Annual Corporate Directors Survey findings: Diminished performance because of aging Lack of expertise Lack of preparation of meetings SA Survey findings: Industry expertise 29% Finance expertise 17% Racial diversity 17% Technology / digital media expertise 13% 9

10 Profile of a non-executive director 10

11 Profile of a non-executive director (1) Gender diversity Gender profile: Non-executive directors The % of female NEDs ranges from 15% in the case of AltX to 20% in the case of industrials and financial services 100% 90% 80% 70% 60% 50% 40% Improvement on prior year 30% 20% 10% 0% AltX Basic resources Financial Industrial Services Female % 14% 18% 15% 17% Female % 16% 20% 20% 19% Male % 86% 82% 85% 83% Male % 84% 80% 80% 81% 11

12 NED total % ACI Profile of a non-executive director (2) Age Average age has increased for chairpersons 56 (median 53), while the average age for nonexecutive directors has remained the same at 50 (median 50) Racial transformation Representation for the first time declined from 42.5 to 41.6% Biggest decline is found in the industrials sector African, Coloured and Indian (ACI) board Representation by sector: Non-executive directors % 40.2% 40.3% 44.2% Industrial Financial Serv ices Basic resources 32.6% NED Total ACI Representation % ACI 44.3% 40.2% 40.3% 44.2% 32.6% AltX 50% 40% 30% 20% 10% 0% 12

13 Profile of a non-executive director (3) Resident status Top 5 representation South Africa : 87.8% UK : 02.9% Australia : 02.6% United States : 01.4% China : 01.0% 13

14 Fees 14

15 Chairpersons fees All sectors Small increase in fees at the median to R422,000 (R394,000) Notable increases in the basic resources sector large-cap increase at 51,4% and small-cap at 48,1% Large-cap industrial services still showing the greatest median at R2.1m Remunerations of chairpersons: All sectors (R 000s) Lower quartile Median Upper quartile

16 Non-executive directors fees All sectors Marginal increases at the median and upper quartile Median increased to R288,000 (R276,000) Notable increases in small-cap basic resources sector and particularly in the industrial sector Large-cap industrials still showing the greatest median of R901,000 almost double what they were in 2011 Remuneration of non-executive directors: All sectors (R 000s) Lower quartile Median Upper quartile

17 Questions? Gerald Seegers: This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Tax Services (Pty) Limited its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers ( ). All rights reserved. In this document, refers to PricewaterhouseCoopers Tax Services (Pty) Limited which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

Executive directors fees & remuneration - Practices and trends South Africa July 2013

www.pwc.co.za Executive directors fees & remuneration - Practices and trends South Africa Introduction NED report considers: - Risk landscape - The number of NEDs has risen to 2,294 (2,267) ED report considers: