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Non-executive directors (NEDs) on company boards in Singapore enjoyed a 7.1% increase in their median average salaries last year.
According to a report by Hay Group, NEDs in 229 listed companies on the Singapore Exchange earned an average of S$60,000 last year, S$4,000 higher than what they earned in 2014.
Medium-sized companies (market capitalisation between S$500 million to S$3 billion) saw the largest increase in directors’ fees of 16%, from S$65,000 to S$75,000.
This was followed by large-sized companies (market capitalisation larger than S$3 billion), with fee increments of 15% (from S$123,000 to S$142,000).
Small-sized companies (market capitalisation below S$500 million) saw the least increase of 7%, from S$50,000 in 2014 to S$53,000 last year.
“It’s likely that they are more cautious as small-sized companies are less profitable,” Kevin Goh, director of executive rewards of Hay Group Singapore.
“However, we think that this will not be sustainable given the shortage of qualified NEDs and expect the director’s fee of small-sized companies to pick up in the next two to three years as demand for qualified NEDs increases.”
Between the different industries, the finance, transport/storage/communications and property industries saw the most significant increase in director’s fee, at 14% and 11% respectively.
“The factors leading to the overall fee increase include stringent regulatory requirements such as the revised Code of Corporate Governance, higher prevalence of risk management committees, more frequent director meetings, and a shortage of qualified non-executive directors,” commented Goh.
NED remuneration comprises of “basic retainers/committee service fees, meeting fees and share-based compensation, with basic retainers and committee service fees making up the bulk of remuneration,” according to the report.