“Does anyone specify in letters of appointment for NEDs anything other that they are entitled to receive fixed basic fees as a NED (plus perhaps an extra specified amount for being chairman of any of the Board’s Committees) for a specified time commitment? In particular does anyone contemplate in letters of appointment additional days for extraordinary events such as hostile takeovers?”
We pay a basic fee for a set number of days and a fee for chairing a committee.
We pay a basic fee and a fee for chairing a committee.
The letters outline the base fee, any additional fees for chairing a committee, being a member of a committee and for the SID.They also indicate overseas meeting allowances paid over and above travel expenses.
The letters indicate an expected time commitment including additonal expectations during times of corporate transactions – this is considered part of the role so ordinarily no extra fee is paid although it is at the discretion of the board.
Like most other companies, we pay a fixed annual amount, an additional fixed amount for committee chair and a fixed annual travel allowance for scheduled meetings. We make no provision in the letters of appointment for any extra time, on the basis that the “swings and roundabouts” principle dictates that in some years there is more activity, and in some years less. Our NEDs also attend ad hoc board workshops or awaydays during the year in addition to board meetings with no extra charge. In recent years we had one year of intense corporate activity and none of the NEDs suggested they should receive any extra payment (nor did we propose it).
The letter of appoitnment set out the fee and expected time requirement. This was basd on known appointments (boards and committees and any chairing of committees). Fees were adjusted if committee memebership or role changed, in addition to any change int he basic fee. Additional fees were paid consequent to an extended offer period (which lasted 6 months but with no transaction at the end) to receognise the exceptional additional hours; I think that is fair, though we did not work out a daily rate.
Our appointment letters provide that the directors may be required to attend additional meetings in exceptional circumstances such as major corporate activities but no additional fees are offered.
We specify the base fee, the additional amount for chairing a committee and for the SID. We indicate an expected time commitment but also state that there may need to be a greater commitment e.g. for corporate events. There is no provision for extra payment for extra commitments.
The letters also confirm that amount that will be used to purchase shares.
We have fixed fees and refer to expected time commitment in the letter but nothing more. We went through a significant period of activity in 2010/11 with a very much larger time demand than the norm – at least double, possibly even more – but no extra fees were paid, and so far as I am aware none were requested. Nor have the fees been increased since then. I hasten to add that we are paying at market norm levels.
We specify a minimum commitment of 20 days pa. with an annual basic fee and any fees for chairing a committee or being SID. We do not try and legislate for additional days or extraordinary events which we would view as included in the basic fee. It’s inherent in the role that at some times there’ll be a requirement to do more than at others.
At my small cap company, we did have problems because the NED fees letters originally specified just an annual fee (plus additonal annual fee for chairmanships) but then NEDs were involved in “exceptional” levels of board activity and there was uncertainty about whether there was an entitlement to extra fees. So in subsequent appointment letters there was wording added to say that there would be an entitlement to additional fees if exceptional activity occurred (nothing too proscriptive about what that activity might be) and fees would be adjusted pro rata. Seems better to anticipate the possibility of extraordinary events in the appointment letter rather than let the situation arise without any provisions governing it.
We specify the annual fee as a lump sum. We also include an anticipated committment of two days per month and list what this is to include. We don’t attempt to deal with extraordinary events.
Our letters specifiy a basic NED fee + an additional fee (£10k) for committee membership. Chairing a committee adds a further £10k to the fee. We also stipulate what % of the basic fee will be paid in shares – currently 18%
we have a base fee, a committee chairman’s fee, a SID fee and a travelling allowance (for NEDs based outside Europe).
We have also made reference to a daily rate of £1500 for days incurred over and above what we expect of our NEDs (typically 29 days per annum), but in reality, this daily rate has never been applied and we have dropped it out of our more recent appointment letters.
we pay just the basic and a fee for chairmanship of a committee. Nothing more.
Yes, the RemCo and AuditCo Committee Chairmen’s fee is £10k p.a. each and the SID fee is £3k p.a.
Our Chairman’s letter includes a per diem rate should the number of days per annum he has to work for us exceed a set number. He has not claimed the per diem rate to date, but it would come into play with exceptional corporate activity, hostile takeover or other changes where he had to take on significatly more workload.
The answer is yes to both of the first two questions. There is a fixed fee for being a board member and a specifed time commitment. We keep a log of the time spent by the NED. There is an additional time commitment for being a Committee member with additional fees attached to the appointment. I don’t think that we cover specific extraordinary events but it would seem sensible
No, we the base fee and committee fees only.