As we enter a new year, it is time to review remuneration changes for ASX 300 board chairs (chairs) and other non-executive directors (NEDs).

Overall

NED fee changes in companies listed in the ASX 300 in between FY2022 and FY2023 were analysed. A total of 849 same incumbent full year chairs and other NEDs across 198 companies were used for the sample.

The median increase in remuneration was 2.15% for chairs and 3.27% for other NEDs. This is lower than last financial year where the median remuneration increase for chairs and other NEDs was 3.79% and 4.36% respectively, following stabilisation of post pandemic economic recovery.

Table 1 presents the change in fees, broken down into chairs and other NEDs.

Table 1: Chair and other NED remuneration adjustments by position

 

Table 2 shows the breakdown of changes in NED total remuneration.

Table 2: Percentage of NEDs by change in remuneration

 

The percentage of all NEDs who experienced an increase in remuneration decreased from 79.59% in FY2022 to 69.26% in FY2023. In FY2023, 69.34% of chairs experienced an increase in remuneration, decreasing from 75.16% in FY2022. Similarly, the percentage of other NEDs who experienced an increase in remuneration declined from 80.46% in FY2022 to 69.24% in FY2023.

Conversely, the percentage of NEDs with remuneration that was either unchanged or decreased in FY2023 is notably higher compared to FY2022. In FY2023, 18.98% of chairs saw no change to their remuneration, while 16.57% of other NEDs experienced no change in remuneration, contrasting FY2022’s figures of 11.18% and 9.83%, respectively.

A higher percentage of NEDs other than chairs experienced a decrease in remuneration from 9.71% in FY2022 to 14.19% in FY2023, while the percentage of chairs who experienced a decrease in remuneration reduced from 13.66% in FY2022 to 11.68% in FY2023.

Table 3 shows the summary statistics for fee increases during FY2023, compared to FY2022.

Table 3: Chair and other NED remuneration increases by board role

 

Fewer chairs and other NEDs experienced an increase in remuneration during FY2023 than FY2022. The median percentage increase in remuneration for chairs was 4.41%, lower than 6.41% in FY2022, while other NEDs who received a remuneration increase of 6.21% compared to 7.11% in FY2022.

Figures 1 and 2 display the distribution of total remuneration in FY2022 and FY2023 for chairs and other NEDs.

Figure 1: Comparison of yearly distribution of chair fees

Figure 2: Comparison of yearly distribution of other NED fees

The majority of chairs in FY2023 were paid between $200,000 and $400,000 with the largest group being paid between $200,000 to $250,000. These observations were similar to FY2022. There are also more observations towards the higher end of the total remuneration distribution in FY2023. A similar distribution for other NEDs is observed between FY2022 and FY2023.

By Company Size

Chair’s and other NEDs’ total remuneration were divided into 4 groups based on the quartiles of companies’ 30-day market capitalisation up to 30 June 2023. The first, second and third quartiles were $1,086m, $2,530m and $6,974m.

Table 4 shows the change in remuneration based on these quartiles for chairs.

Table 4: Chair’s median and average change in remuneration by company size

 

Table 5 shows the change in remuneration based on the quartiles for the other NEDs.

Table 5: Other NEDs’ median and average change in remuneration by company size

 

Chairs in companies with market capitalisation between $1,086m and $2,530m experienced the largest median increase in remuneration at 4.00%.

Chairs of the smallest size group recorded no median change in FY2023.

Chairs of the largest companies by market size recorded a median increase of 2.15% to their remuneration.

The largest median fee increase for all other NEDs was 4.57% for companies with market size between $2,530m to $6,974m. The largest group by market size experienced 2.68% increase in median pay. The smallest size group recorded no median change.

By Company Sector

Chairs and other NEDs were divided into 11 groups based on the company GICS sector classification.

Table 6 shows the change in chairs’ remuneration based on GICS sector.

Table 6: Chair median and average change in remuneration by GICS sector

Sector	Number of Chairs	FY2023 Median	FY2023 Average	Median % Change	Average % Change
Communication Services	8	$354,500	$374,105	3.99%	10.32%
Consumer Discretionary	19	$231,500	$267,384	0.00%	2.93%
Consumer Staples	5	$411,817	$426,379	1.42%	-3.25%
Energy	7	$243,192	$259,299	0.45%	1.59%
Financials	24	$305,000	$410,776	0.06%	1.96%
Health Care	11	$291,022	$361,754	2.24%	5.55%
Industrials	16	$232,795	$295,554	0.95%	4.01%
Information Technology	8	$222,581	$289,412	7.08%	7.14%
Materials	26	$278,376	$391,550	4.93%	9.58%
Real Estate	11	$293,093	$347,899	4.00%	5.00%
Utilities	2	$603,368	$603,368	1.18%	1.18%
All	137	$283,327	$349,170	2.16%	4.81%

 

The median chair fees in the Consumer Discretionary sector saw no change. The Energy, Financials and Industrials sectors saw little median change. The Information Technology sector with the lowest median chair fees saw the largest percentage increase of 7.08%, followed by the Materials sector at 4.93%.

The Financials sector saw the lowest median fee growth of 0.06%.

Table 7 shows the change in other NED remuneration based on GICS sector.

Table 7: Other NEDs’ median and average change in remuneration by GICS sector

Sector	Number    of NEDs	FY2023 Median	FY2023 Average	Median % Change	Average % Change
Communication Services	39	$180,693	$187,716	4.26%	5.33%
Consumer Discretionary	93	$159,500	$178,249	0.00%	3.79%
Consumer Staples	39	$199,025	$218,368	3.00%	4.83%
Energy	22	$153,918	$160,057	1.73%	6.47%
Financials	120	$235,503	$241,725	0.69%	5.34%
Health Care	59	$175,873	$196,591	2.77%	6.14%
Industrials	101	$213,011	$210,840	4.60%	7.93%
Information Technology	34	$175,000	$161,893	9.20%	10.45%
Materials	123	$204,000	$210,460	6.01%	8.14%
Real Estate	71	$195,000	$198,687	4.50%	4.94%
Utilities	11	$264,306	$262,615	3.81%	4.32%
All	712	$196,000	$205,393	3.32%	6.25%

 

The Consumer Discretionary sector saw a 0% median change in NEDs remuneration.

NEDs in the Information Technology and Materials sectors saw the largest increases in the median NED fees with a median percentage change of 9.20% and 6.01%, respectively. The Information Technology sector continued to experience the highest median percentage change following 9.29% in FY2022.

The Financials sector saw the lowest median change at 0.69%, contrasting FY2022 at 4.45%.

See HERE to view our analysis from last year.

Methodology

The data was derived from GuerdonDataÒ, which is the proprietary database by Guerdon Associates for executive and director pay for all companies in the ASX300. (Available for client subscription, to try our demo product, click HERE. For enquiries regarding a subscription, please contact us on info@guerdonassociates.com).

Companies with financial years ending in December or that are yet to disclose their 2023 annual reports at the time of analysis were not considered in the study. Similarly, NEDs that changed position during the time of study were removed from the sample, as well as those who were not in their position for the full 2 years. Companies that were only added or removed from the ASX300 during the duration of the sample time period have also been removed from the study.

The market capitalisation of companies was taken on a 30-day average up to the 30 June 2023. Therefore, for companies that were delisted between the end of 2023 and this time period, we were able to take their market capitalisation from that time period.

Exchange rates for directors paid in a foreign currency was taken as the daily average for the respective exchange rate during the relevant financial year.

Calculations and percentages were made on each NED’s change in remuneration.

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