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Non-executive director remuneration fees rise significantly

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Non-executive directors (NEDs) sitting on renumeration committees, responsible for setting executive pay, have seen the fees they receive increase by an average of 8.8% over the last 12 months.

The average fee for FTSE 100 NEDs is £65,816. The rise takes the additional fees for remuneration committee members to £12,622. For committee chairmen, the fee rises to £21,258, found the research by IDS Executive Compensation Review. 

Renumeration committees are responsible for reacting to internal and external business factors and evaluating changes to executive pay that should be made a result. They sit several times a year. 

The sectors in which NEDs command the highest average fees are: resources, where NED fees now average £74,726; chemicals and pharmaceuticals, with average fees of £71,629; and financial services, where NEDs command an average fee of £69,869.

IDS Executive Compensation Review assistant editor Nasreen Rahman told HR magazine an increased workload was the main factor behind the rise. "Changes to legislation are making the work of the boards more onerous. This means the time they have to give up for these boards is rising significantly and they fees are increasing as a result," she said. 

This legislation means shareholders now have an increased say in the reward packages of executives on the board. It came in after 2012's so-called 'Shareholder Spring', in which shareholders forced several executives to resign after unhappiness at leaders' remuneration packages.