Non-executive directors: Practices and fees trends report 2023

16th edition

Overview

In the 16th edition of our Non-executive Director: Practices and Fees Trends Report, we provide an overview of the profile of NEDs of the Johannesburg Stock Exchange (JSE) Top 100 companies and fees paid to NEDs of the JSE Top 200 companies for the period 1 November 2021 to 31 October 2022.

The analysis in this year’s report is based on actual fees paid to non-executive directors of the JSE Top 200 companies as disclosed in the annual financial statements of JSE-listed companies for the period under review.

 

We also address four current topics central to the role of being a NED:

  • Building trust: Building multi-stakeholder trust does not challenge or undermine boards’ obligation to serve shareholders. Rather, it reflects the growing understanding of how a multi-stakeholder view contributes to shareholder value creation. To guide boards’ thinking on how they can enhance trust with multi-stakeholder constituencies, we take a fresh look at each of the key stakeholder groups and discuss why trust matters, as well as how to build it and keep it.
  • Diversity and inclusion: Heightened expectations of director conduct and continuing calls for diversity of board membership will increase pressure for accelerated refreshment of board composition. The pressure is on boards and NEDs to create diverse, supportive, and inclusive environments. Diverse boards not only include members of different cultural and economic backgrounds, but also multigenerational members. There are five generations in the workforce, and they each bring their own perspectives and experience. To encourage diversity, sometimes we need new and inexperienced directors - how do they become good directors and how do we support new NEDs?

  • Discretion: By this time all boards (and remuneration committees in particular) had their fair share of applying discretion to incentives during and post the pandemic.  The application of discretion when it comes to remuneration decisions, will continue to be debated in boardrooms. The board as a whole must regularly discuss the factors driving performance variances against budget and incentive targets. Typical questions to consider are: What unplanned occurrences, such as the war in Ukraine, restructurings and the continuing electricity crisis, can influence results? What windfalls could arise as a result of these unplanned events? Or will the forces that are responsible for uncertainties balance out over time, suggesting limited discretion might be the solution?
  • Board fees: More challenges, new board members, how should fees for additional time be structured and is it time for boards and companies to tackle the risk versus reward question head-on with shareholders?

Illustration: People working on research results

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Non-executive directors: Practices and fees trends report 2023

Contact us

Jacques Eybers

Jacques Eybers

Partner, PwC South Africa

Tel: +27 (0) 11 287 0506 / +27 (0) 83 325 2122

Karen Crous

Karen Crous

Reward Lead: Governance, Tax & Legal, PwC South Africa

Tel: +27 (0) 11 797 4616

Marike Kleynhans

Marike Kleynhans

Senior Manager | Reward, PwC South Africa

Tel: +27 (0) 21 529 2303

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