February 19, 2012 11:52 pm

Jump in pay for non-executive directors

Non-executive directors of FTSE 100 companies received rises averaging 10 per cent in businesses where fees were increased over the past year, a study has found.

Two-thirds of FTSE 100 companies increased basic fees during the 12 months to last June, according to Incomes Data Services, the pay monitoring group.

The overall average increase for non-executive directors, including those companies that did not increase rates, was 4 per cent. The average fee was £63,951.

Rates for chairmen increased by an average of 9 per cent in companies that carried out a review, with average fees for FTSE 100 chairmen at £374,097.

The findings aggravate controversy about executive pay and bonuses. Vince Cable, business secretary, has proposed to improve transparency and strengthen shareholders’ powers.

IDS said the highest-earning chairmen were Sir Philip Hampton of Royal Bank of Scotland, Marcus Agius of Barclays and Carl-Henric Svanberg of BP, who all earned £750,000 in fees.

Nasreen Rahman, the report’s author, said fees were being driven up by increased pressure on non-executive directors to solve problems of executive pay and performance – as well as to improve corporate strategy.

“The question for shareholders is whether the increase in NED [non-executive director] fees is improving corporate governance or whether it is following the executive pay pattern and getting out of line with performance.”

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