In the UK, the Corporate Governance Code stipulates that remuneration committees should be comprised of independent non-executive directors of the company. Many non-executive directors are current or former members of other company boards; some will sit on multiple boards. Through examining company annual reports it is possible to compile information on pay received by remuneration committee members in a particular year from their different board roles.
This report uses information in 2014 annual reports to examine the payments received by the remuneration committee members of FTSE 100 companies. Information has been sought on total remuneration of FTSE 100 remuneration committee members, including pay from current executive and other nonexecutive directorships of FTSE listed companies. Directorships on boards of companies listed in other countries are included, but the data may not include information on all overseas positions held by FTSE100 directors due to lack of appropriate disclosure outside of UK. This means that our report is likely to be a conservative estimate of the total earnings of remuneration committee members.
The report finds that on average remuneration committee members were paid £441,3839 , which is more than 16 times average full-time earnings of £27,20010. The highest paid remuneration committee member was paid £9,228,248, or 339 times more than average earnings.
The report also reveals that of the 383 remuneration committee members included in the sample, 246 (64 per cent) held a board position at another company during the year under review. Thus nearly two thirds of the current membership of remuneration committees is drawn from the corporate world in which high and excessive pay are taken for granted. Their own levels of remuneration are far in excess of the pay of ordinary workers within the same companies or across the economy as a whole. It is important to remember that non-executive board positions are in no way fulltime positions; time commitments will vary, but a recent report found that NEDs on the largest companies spend an average (median) of 30 days per year on their role, with the median time spent on remuneration committee work being four
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