Boards: less directors, more directors' fees
The Les Echos article, "Boards: fewer directors, more directors' fees," quoted Russell Reynolds Associates Consultant Paul Jaeger on the increase in directors' fees despite the drop in number of directors. The article is excerpted below.
Trend: The average amount of director's fees is slowly growing. At the same time, the trend within the boards of directors is to reduce the number of directors for reasons of efficiency.
The directors and members of the supervisory boards of CAC 40 companies received, on average, director's fees of Euro 85,300 for 2018-2019, according to the annual study of Russell Reynolds on the governance of CAC 40 and SBF120 companies, which brought the season of general assemblies to an end. In the SBF120 companies - excluding the CAC companies - the average amount is Euro 50,500, as opposed to Euro 50,200 one year earlier. Last year, the amount calculated for the fiscal year 2017-2018 reached Euro 84,000.
This slight uptrend is in line with that of the international alignment defenders. From this point of view, in CAC 40, it is better to be the director of a foreign company: The average amount of director's fees reaches Euro 146,000. "A number of directors will make themselves more available for these companies", notes Paul Jaeger, partner of the headhunting firm in Paris. However, some restrictions are being noticed in the recruitment of directors. Some of them are financial, but others are the result of a conflict of interest, and not always of the one that can be suspected spontaneously. "There are invisible conflicts, primarily the loyalty to the company where the career was built", indicates Paul Jaeger. For example, a former executive of Unilever will be reluctant to accept a position at Procter & Gamble. Other profiles, which are in high demand, are difficult to attract: These are the directors who cumulate executive career paths, international responsibilities, governance experience, crisis management, and who are overburdened.
In any event, according to Paul Jaeger, the trend is to reduce the number of directors for reasons of efficiency. Between 2017 and 2019, the boards of directors of CAC 40 decreased from 13,95 to 13,6 members. "This trend will continue. The 12-person threshold is regarded as optimal", according to Paul Jaeger. It corresponds to the average size of the boards of SBF120.
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