Montag, 9. Februar 2015

Non Executive Directors in Europe Report 2014

Discover the latest trends in pay practices, structures and diversity of leading European companies.

In a year of relative quiet on the executive compensation front, boards have ensured that their own fee increases also keep a low profile so the interesting developments are more to be found in the structures and compositions of boards and in the evolving roles of committees. This review provides a detailed snapshot of the background, experiences and pay of the individuals responsible for the governance of Europe’s companies.

highlights from the report

change of scope
We have seen a clear change of scope around both risk and remuneration committees. The prevalence of risk committees went from 12 per cent last year to 22 per cent this year.

the scope of remuneration committees is increasingly changing
The scope of remuneration committees is increasingly changing as the committee work takes on more and more aspects of managing executive human resources, including succession and performance management. We now see about one third of remuneration committees with a scope beyond simply the pay and rations of executives.

the composition of boards is changing
The proportion of female directors increased across the sample from 21 per cent to 23 per cent over the year and some 38 per cent of new director appointments were women. At the same time the gender pay gap we have been reporting on in previous years fell marginally from 10 per cent to 9 percent as more women have been brought onto boards’ committees. The percentage of committees without women members fell during the year from 43 per cent to 34 per cent for audit committees and from 48 per cent to 40 per cent for remuneration committees.

boards are much more international
This year we saw the average percentage of local directors drop from 66 per cent to 64 per cent and the average percentage of directors with the majority of their career in the country where the company is headquartered dropped from 62 per cent to 55 per cent.

multiple board positions
This year we also tested the hypothesis that European boards tend to be populated by the same set of directors and found that this is not the case. Only 13 per cent of directors sit on more than one large European corporate board.

board fees are following executive pay with minimal movements 
Only Norway and Sweden saw a median increase for individuals who were board members in the sample both last year and this year.

the market median level of actual fees paid moved
Although the median increase was zero, the market median level of actual fees paid to non-executive chairs of boards moved to €265,000 (up from €249,000 last year) and the median fee for other non-executive directors was €81,800 (a downward movement from €86,000 last year).

pay structures have also been changing but not in a uniform way
Some countries, like Germany, continue to see a significant share of companies use variable compensation, in sharp contrast to practices in countries like the UK. Fees delivered in shares are popular in countries like Switzerland and Finland but almost unheard of in other countries like Italy. And across the continent it is still relatively rare to see requirements for non-executive directors to build a significant shareholding in the company they oversee, but we are expecting this to change.

For further information and interview requests, please contact:
Carl Sjostrom, Managing Director | Executive Reward Europe.

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