European independent directors are compensated up to one hundred times more than others
According to data conducted by Fitz Partners, the annual compensation for European independent directors on fund boards varies significantly, ranging from €1,000 to over €100,000 per director.
According to the findings of the research firm's analysis, directors who are the single independent director on their fund's board are compensated significantly more than directors who are one of numerous independent directors on the same board. Additionally, the number of independent board members varies per jurisdiction. Fitz Partners discovered that Luxembourg fund boards had fewer but better compensated independent directors than Irish boards. However, Luxembourg has fewer independent directors than Ireland.
Two-thirds (66%) of fund boards in Ireland have an average of two to three independent directors. In Luxembourg, just one or two independent directors comprise the bulk of fund boards (60 percent). The study discovered that compensation is regulated not just by jurisdiction but also by fund products and the amount of assets insured. Independent directors who oversee over 100 goods are compensated twice as much as those that oversee only 20 products.
Hugues Gillibert, CEO at Fitz Partners, said: “Our research shows that there is a natural correlation between independent directors' fees and the number of funds or size of assets to be covered by each director – a reflection of independent directors’ workload and responsibilities.”
He continued: “Interestingly, fund ranges with between 20 to 100 products have a relatively low variance in fees which would point to a set industry market rate for directors' remuneration at this level.
“At both ends of the spectrum where boards cover less than 20 funds or over 100 funds, directors’ fees become less concentrated, allowing space for negotiation on both sides.”
Shiv Taneja, chief executive officer of the Fund Boards Council in the United Kingdom, stated that it was necessary to conduct further study to determine why there is "such variety" across pay levels.
Among the issues at play, he stated, were the expertise of the directors, the number of board positions they held, and the intricacy of the investment strategies that certain directors manage. Fitz Partners analysed 340 fund families in Luxembourg and Dublin that collectively manage €3.4 trillion.
By fLEXI tEAM