GUBERNA-Euronext Breakfast for General Counsels: Remuneration of non-executive directors in Listed companies
GUBERNA had the pleasure of sharing the first insights of a new study on the remuneration of non-executive board members at an exclusive breakfast event hosted by our partner Euronext. The event took off with a presentation from Haythem Abdelmoula, head of growth marketing & data intelligence at Euronext, on the differences of new technology application in private and state-owned enterprises. Prof. Dr. ir Regine Slagmulder, lead of GUBERNA’s competence center for Listed companies, followed with a presentation of the key findings from GUBERNA’s recent study on the remuneration of non-executive directors (NEDs) in Belgian listed companies. The event closed with a lively panel debate on the topic with Robert Gerritsen (ISS), Béatrice Richez-Baum (ecoDa), François Reytens (SpencerStuart) & Prof. Dr. Ir Regine Slagmulder (GUBERNA), expertly moderated by Benoît van den Hove (Euronext).
NED remuneration practices of Belgian listed companies
Our study analysed the remuneration levels and package for non-executive board members of 66 Belgian listed companies, representing 624 board members (87% of which are non-executive directors). Key findings from the research include:
Independent board members are always remunerated in Belgian listed companies, while (non-independent) non-executive board members are remunerated in most cases. Executive directors are separately remunerated for their board mandate in only a minority of the companies.
The cost of a board member in 2024 increased by more than half in BEL Small companies compared to 2021 and by 25% in BEL Mid companies, while staying more or less status quo in BEL20 companies (based on median values of total annual remuneration, excluding share-based remuneration).
For the remuneration of board members (different from the board chair) the popularity of fixed annual fee plus attendance fee per meeting has systematically increased since 2016. While it is the predominant pay structure for NEDs in BEL20 and BEL-Mid companies, more than half of the board members in BEL-Small companies receive a fixed annual remuneration.
Most companies apply specific remuneration arrangements for board chairs and committee members/chairs. Almost 60% of board chairs are remunerated based on a fixed annual fee that amounts to twice the fee of an ordinary board member.
Committee chairs are typically compensated based on a fixed fee per year. 12% of the audit committee members (different from the audit committee chair) are not separately remunerated for their mandate in this committee (besides the remuneration that they receive as an ordinary board member). The percentage of unpaid committee mandates is 15% for the members of the remuneration committee.
Even though the 2020 Belgian Code on Corporate Governance recommends that non-executive board members receive part of their remuneration in company shares, less than 30% of Belgian listed companies choose to compensate their NEDs with shares. This practice is most popular in the BEL20, with 58% of those companies making it compulsory.
Renumerating non-executive board members: a delicate balance
The panel discussion focused on how to design a remuneration policy that helps attract, reward and retain the necessary talent on the board and promote sustainable value creation. Based on principle 7 of the 2020 Code that “the company shall remunerate board members and executives fairly and responsibly”[1], the panellists agreed that the pay level and remuneration policy must be attractive to create an incentive for board members to sit on the board, but it should not be the sole reason. The question arose how to reconcile fair NED pay with the need to preserve independence and how to assess that remuneration is not the primary motivation. The panel also shed some light on the guidelines that are considered by proxy advisors when advising on a voting policy on NED remuneration. The discussion concluded with some suggestions for improvement of the current remuneration system. Companies that spend sufficient effort defining an attractive and meaningful remuneration package for their NEDs will attract the best talents on their boards.
We will soon publish the full study on remuneration in listed companies.
