Bank board fees jump 18%

Non-executive directors in the country’s five largest banks were paid nearly R110 million in fees in 2016, a growth of 17.8% about the year prior. As a whole, the 80 directors (some of whom were appointed or retired or attended as alternates during the year) were paid R109.88 million in 2016, versus R93.28 million in 2015.

This remuneration includes fees to take care of board meetings, board sub-committee meetings (and even chairing these) and then for services as directors of group subsidiaries. Fees for directors appointed by parent companies, e.g. Old Mutual Plc with regards to Nedbank, Barclays Plc for Barclays Africa Group, are paid to people companies (and are also and this includes analysis).

Directors at FirstRand were paid you use R37.7 million in 2016, yet another of your total to the five banks. The complete as disclosed within the integrated report for directors paid in rands in R24.58 million, however two foreign-domiciled directors (Deepak Premnarayen and Hennie van Greuning) were paid a total of $905 000 in. Using the average exchange rate disclosed elsewhere inside the report of R14.51:$1, this implies one more R13 million.

* That is higher than the volume of ‘actual’ board members search were retirements/resignations and appointments in the past year in all cases.

Among chairs, Thulani Gcabashe of normal Bank Group is paid probably the most. His R6.5 million total includes R538 000 of ‘other benefits’ (described within a footnote as “use of automobile and/or club subscriptions”). Wendy Lucas-Bull, Laurie Dippenaar and Vassi Naidoo are typical paid around R5 million. Capitec’s remuneration due to its chairman (R1.2 million that year to February, using an increase to R1.3 million proposed due to this FY), like its non-exec fees, is noticeably modest.

* Appointed as chairman on June 1 2016. Directors fees because of this position in FY2017, as approved, were R1.Two million.

Standard Bank, in the remuneration report, states that fees “are based on a carefully considered assessment of non-executive directors’ responsibility, such as the lot on the job involved at committee level. The board, as well as its committees, chairmen and committee members, spend lots of time on in-depth analysis of matters relevant to the group’s performance and regulatory requirements”.

Among these banks which disclose aggregate fees covered for committee membership (or chairing), 27% of normal Bank’s total directors emoluments were for this function, while for Nedbank and Barclays Africa Group, the price were 37% and 40%, respectively. It needs to be noted that Barclays Africa established one more “ad hoc” board sub-committee for your Barclays Plc sell-down. They have eight members, of which five are non-executives.

All banks benchmark their directors’ fees against peers and various other large JSE-listed companies. FirstRand states in the integrated propose that “fees paid to non-executive directors derive from economy practice. These fees are reviewed because of the directors’ affairs and governance committee and therefore are approved in advance by shareholders on the annual general meeting”.

None of the banks pay directors dependant on meeting attendance, rather they’ll use a fixed-fee structure. Nedbank is the point that “non-executive directors account for decisions made no matter attendance at meetings. Non-executive directors are also required, ought to be course, to represent stakeholders also to increase the risk for necessary preparations for meetings together with other engagements. Group Remco is glad which the fee structure used for respect of non-executive directors remains appropriate”.

More so than companies in other sectors, fiduciary duties for directors of banks are onerous. As Traditional bank notes rolling around in its integrated report, “Candidates must satisfactorily fulfill the fit and proper test, as needed because of the Banks Act”. Beyond the duties and degree of work required, specialist skills and experience are prerequisites. This is also true for board committees including audit, risk/capital management/compliance, and also the IT one.

* Hilton Tarrant works at immedia. The guy can always be contacted at hilton@moneyweb.co.za.

* He owns shares in FirstRand, first bought in July 2011.

* FirstRand’s 2016 financial year ran to June 30 2016.

* Capitec’s 2017 financial year ran to February 28 2017.

* Standard Bank, Barclays Africa Group and Nedbank’s financial years ran to December 31 2016.

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