Alvarez and Marsal

A&M Tax Advisor Weekly

Non-Executive Director Fees in the FTSE 350 and SmallCap – Summer 2021

Jeremy Orbell, Managing Director

jorbell@alvarezandmarsal.com

Nicolas Stratford, Managing Director

nstratford@alvarezandmarsal.com

David Tuch, Managing Director

dtuch@alvarezandmarsal.com

Zijun Zhao, Director

zzhao@alvarezandmarsal.com

July 15, 2021 / North America

In the latest A&M Non-Executive Director (NED) report we look at actual fees paid and the disclosed fee policies for FTSE 350 and FTSE SmallCap companies with year ends between 1 March 2020 and 31 January 2021. Fee differences between financial services companies and other sectors are also analysed in this report.

  • Key points to note:
  • Median actual fees received by Non-Executive Directors in the SmallCap have decreased due to a high proportion of directors taking voluntary reductions in 2020 (typically for three months). In FTSE 350 companies, median fees received were broadly stable year on year, with the exception of some financial services companies where fees received have increased slightly.
  • Median policy fee levels for Non-Executive Directors are mostly unchanged year-on-year, with the majority of FTSE 350 and SmallCap companies freezing fee rates.
  • The number of companies paying additional responsibility fees for the main Board committees is increasing. The most significant increase is in the percentage of companies paying additional fees for the Designated NED, for the purpose of the employee voice, as the role and time commitment becomes more defined.

Overall, companies are showing similar restraint in reviewing NED fees as they have in reviewing executive director remuneration. This is not a great surprise, as increases in NED fees will be hard to justify while many employees have been impacted by the pandemic, whether that is through furlough, pay freezes, reduced variable pay, redundancy or the impact of changes in working practices. Where fees have increased, this has typically been associated with increasing time commitments, (e.g. in relation to committee responsibilities or the new role of Designated NED) or where fee rates are demonstrably at odds with market norms.

As we come out of the pandemic and the economy recovers it is possible that, along with some wage inflation, we may also see some inflationary pressure on NED fees.

Download the full report. 

How can A&M’s Executive Compensation team help?

A&M Executive Compensation Services is well-positioned to advise Remuneration Committees through this period. Engagements are led by a Managing Director who attends all meetings and is actively involved in all deliverables.

This ensures you always have access to the right level of advice, particularly when making critical decisions under time pressure. Our Managing Directors have a combined 80+ years of experience in advising on executive remuneration matters.

Contact us if you have any questions regarding the content in this report.

 

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North America