Directors average $600 per meeting

Press, 16 December 1985, Page 31

Directors average $600 per meeting

Company directors who are not also executives receive on average more than $6OO per board meeting, a survey by the Institute of Directors suggests. Three hundred and fiftytwo members of the institute took part in the survey, which was conducted by P.A. Management Consultants.

The range of fees for nonexecutive members surveyed was wide, but the average fee for non-execu-tive directors was $630 per meeting. The average for ordinary non-executive directors in public companies was $593 per meeting, and $521 for private companies. Non-executive chairmen received an average of $837 in public companies, and $783 in private companies. Eighty per cent of the companies surveyed provided some form of benefit to directors. Travel expenses and out-of-pocket expenses were the most common form of benefit, but half of the public companies provided superannuation benefits.

Between 1981 and 1985, directors’ fees rose on average 71 per cent, with an average rise of 93.7 per cent in private companies, and 61.2 per cent in public companies. The survey respondents had had an average service on boards of 18 years. The survey indicated that directors are staying longer on

boards. Twenty per cent had been directors for less than 10 years, compared with 28 per cent in a similar survey in 1981; and nearly 7 per cent had held directorships for more than 35 years, compared with 5 per cent in 1981. Almost 80 per cent of the directors had been on boards for 10 or more years. Seventy per cent of the directors were non-execu-tive, with the proportion lower in public companies than private ones. Only 2.5 per cent of the public companies reported on had an executive chairman, and 4.5 per cent of private companies had one, Twenty-four per cent of directors did not receive fees for meetings; these were mainly executive directors.

Of those surveyed, nonexecutive directors on the boards spent an average of 5.2 hours preparing for meetings, ranging from 4.2 hours for non-executive directors of private companies to 6.8 hours for nonexecutive chairmen of public companies. Executive directors spent, on average, longer in preparation for meetings than non-executive directors.

Only 11 per cent of nonexecutive directors and four executive directors reported receiving payment for attending special committee meetings.

The average length of board meetings is 4% hours for public companies and 3% hours for private comSes. Sixteen companies meetings lasting nine hours or longer.

Seventeen per cent of public companies and 23 per cent of private companies had no executive directors on their boards. Five per cent of public companies and 17 per cent of private companies had only executive directors.

Releasing the results of the survey, the president of the New Zealand Division of the Institute, Mr Peter Grayburn, said that no attempt had been made to assess the costs which nonexecutive directors incurred in earning the gross fees shown above. These costs included maintaining an office, secretarial support, car expenses, telephone, and insurance. He suggested such costs might exceed a quarter of the gross fees earned.

Non-executive directors’ fees per hour ($) Public Private All

A. Non-executive chairmen 182 Meeting time only 176 184 Meeting and preparation B. Non-executive directors 72 80 77 Meeting time only 132 142 137 Meeting and preparation 57 64 61