Bye non-execs, hello part-time directors
Wednesday 20th October 2010, 2:30PM BST.
THE pay of non-executive directors is not high enough, according to leading private equity boss Jon Moulton.
The Guernsey resident and Better Capital chairman made the comments while speaking to the audience at a Norman Broadbent event in London.
Mr Moulton (pictured) questioned whether non-executives were being paid enough for the extra responsibility and pressure they were under following the financial crisis.
‘Non-executive directors are dying out, killed by the weight of regulation, legislation, health and safety and much more.’
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So they are doing the work that they are being paid to do.. Not all chat, lunches and jolly boys outings now eh !!
Join the real world..
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Not paid enough? What rot. They are generally paid a fortune in relation to any actual work that they do. They are the walking embodiment of ‘”its not what you know, its who you know”. In most cases its just a question of having their names on the company letterhead, a few hours a month in a board meeting and one or two nice lunches a year with advisors, financiers or clients. For a nice fat paycheck for somewhere between £10k and £250k depending on the size of the company. But that is not the real cash bonanza, many NED’s make literally a fortune from shares or share options from companies they are involved with. I personally know one who made over £3 million profit in this way from just one small to medium sized company. And that was in addition to his salary from his ‘day job’, his other NED positions etc. etc. My heart doesn’t bleed for NEDs, its money for jam!
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Beanjar – NED fees are often less than £10k and they do a lot more work than you describe – plus in these difficult times investors tend to be a lot more litigeous and so what may have once been a theoretical personal liability is now a very real personal liability. That in itself requires NEDs to commit more hours to the task, which was Jon Moulton’s point.
Plus, share option incentives for NEDs are now very much frowned upon as it compromises their independent status. Many will have shareholdings but they are expected to buy these at market rate rather than receive them as extras to their fees.
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TL, I don’t think you will find many NEDs on less than £10k, the guy I knew was on that 15 years ago. As I said, it depends largely on the size of company. Obviously, NED’s often hold a number of similar positions and are also drawing a main salary or pension additionally. Of course, purchase of shares or share options has to be at market value but in a private company that value is more or less whatever the Directors and auditors agree, the tax man will generally rubber stamp it. You are talking theoretically, I have been in a position to see how things work in practice.
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