February 18, 2020
Slow progress is being made towards more women on boards across Europe and less gender pay disparity, a study has suggested. According to Korn Ferry’s latest ‘Non-Executive Directors in Europe’ report, the proportion of women on boards increased to 34 percent in 2019, up from 32 percent in 2018 and 30 percent in 2017. The number of committees without any female directors fell, with 19 percent of audit committees (down from 24 percent) and 25 percent of remuneration committees (down from 29 percent) being all male.
In the 393 listed companies analysed in 13 European countries, male non-executive directors received 5 percent (median) more in total fees than their female counterparts, which is a 1 percent smaller gap than the previous year. The remaining gap appears to result mainly from an underrepresentation of women on the strategically important board committees, which has translated into women board members being paid less than men.
As in last years’ report, just 8 percent of all non-executive board chairs were women. However, the number of women holding deputy chair or senior independent director positions increased to 20 percent (up from 18 percent). The number of women in remuneration chair roles increased to 31 percent (up from 25 percent) and chair of the audit committee roles increased to 29 percent (up from 24 percent).
Some countries have set internal targets while others, unsatisfied with slow progress, have resorted to strict quotas to prioritise female hiring
‘Different countries have adopted different approaches to boost female presence in the boardroom. Some have set internal targets while others, unsatisfied with slow progress, have resorted to binding obligations using strict quotas to prioritise female hiring’, said Sonamara Jeffreys, Co-President of Korn Ferry EMEA. ‘Both approaches have had success in different countries, suggesting there’s no one way to handle this problem – it’s about identifying the stumbling blocks in each situation and being flexible in how to address them.’
Director remuneration and fee policy varies widely across Europe. Board fees are typically compensated with fixed fees. According to the report, the median basic fee paid to directors across Europe is €70,000, with significant variations across the region, often based on time and responsibility commitment as well as local practice. Directors who are on a board committee, such as an audit committee or remuneration committee also receive an additional fee.
The study also found that pay structures have continued to develop, although not in a uniform way. Some countries, like Germany, continue to see a proportion of companies use variable compensation for non-executive directors, in contrast to practices in countries like the UK.
Fees delivered in shares are popular in some countries, including Switzerland and Finland, but are almost unheard of in other countries such as Italy and the Netherlands. Across the continent, it is rare to see requirements for non-executive directors to build a significant shareholding in the company they oversee.
The research follows a recent UK report which found that more than a third of FTSE 100 boards still lack any ethnic minority representation. The Parker Review found that it would be ‘challenging’ for companies to hit the target set in its initial 2017 report that FTSE 100 companies should have at least one director from an ethnic minority background by 2021.
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