NEDs receive "inflation busting pay increases"

The average basic fee for non-executive directors (NEDs) in the FTSE-100 has risen by 5.1% over the last year to £58,595, according to Incomes Data Services (IDS).

IDS said that the non-executive chairmen of FTSE-100 companies received average pay increases of 6.7% boosting their average fees to £334,463.

"The rises are the latest in a line of inflation busting pay increases for NEDs. The 5.1% average basic pay rises for NEDs was more than double the going rate of inflation during the period," the company added.

Nasreen Rahman, principal researcher of executive compensation review at IDS, said: “These pay rises come in a year when many workers have had their pay frozen. Shareholders have been promised for years that increased NED fees are part of the process of building a more robust corporate governance regime where NEDs devote more time to the job. However, shareholders might soon be tempted to start asking whether these pay rises are really delivering better governance and better shareholder returns.

“The recommendations in the Walker review mean that being a NED in the financial services sector is likely to require greater time commitments than in the past, particularly in banking and financial institutions. It will be interesting to see if there is an increase in NED remuneration in response to this.”

IDS’ research also found that banks still lead the way in fees for chairmen in the FTSE-100, with the chairmen of Barclays and Royal Bank of Scotland in joint first place, receiving £750,000 each.

Royal Dutch Shell has the highest paid NEDs at £111,550 a year and also the third highest paid chairman.