Total board costs in Canada increased 6% between 2013 and 2014, finds Korn Ferry Hay Group. This was higher than the average salary increase for employees, as well as inflation.
The increase was not directly impacted by changes in the number of meetings and directors, but it was more related to director pay increases and governance support expenses reflecting increased workload and complexity, explains Chris Chen, national director for Total Rewards at Korn Ferry Hay Group.
The report examines the average number of board meetings for S&P/TSX 60 companies and found it hasn’t increased substantially year-to-year. However, directors are now expected to work more hours and are more exposed to financial and reputational risks, driving up compensation demands.
Further, S&P/TSX 60 companies pay approximately $7,500 per meeting per director (includes retainer, meeting fees, equity compensation and benefits), an increase of about 7%. Resource companies still lead the market, while banks tend to provide the lowest average director board cost on a per-meeting basis.
What does the future hold? With demand staying steady for directors with business management experience, risk management and global markets expertise, it’s unlikely costs will be dropping any time soon, notes Korn Ferry Hay Group.