Remuneration practice for non-executive directors has been characterised by relatively fixed structures.
Some companies have introduced share and option plans for directors. These focus energy on performance and allow directors to share in the success of the company.
Others argue they are inappropriate under ASX guidelines.
Some government organisations pay board members and non-executive directors on a sessional basis; usually a fixed daily rate determined by government policy (often upon recommendation from the relevant remuneration tribunal).
Very few Australian organisations link non-executive directors'
remuneration to organisational performance. The ASX 'Principles of Good Corporate Governance and Best Practice Recommendations' .
Specifically Principle 9 'Remunerate Fairly and Responsibly' addresses the issue of directors remuneration. It contains two seemingly
contradictory statements:
'The company should design its remuneration policy in such a way that it:
"Motivates directors and management to pursue the long term growth and success of the company within an appropriate framework." P 54
And yet further in Box 9.3: Guidelines for non-executive director remuneration:
'1. Non-executive directors should normally be remunerated by way of fees; they should not participate in schemes designed for the remuneration of executives.
2. Non-executive directors should not receive options or bonus payments'.
Geoff Nunn & Associates can provide expert advice on Board remuneration and develop remuneration structures appropriate for the organisation's operating environment. We also provide expert advice on executive remuneration strategy to Board Remuneration Committees.
