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Stuart Gentle Publisher at Onrec

Korn Ferry Study Reveals European Board Diversity Slowly Increases as Pay Gap on Boards Begins to Narrow

According to Korn Ferry’s latest Non-Executive Directors in Europe report, there is a slow march toward more diverse board representation and less pay disparity between male and female board members in the region.

The study finds that overall, the proportion of female directors increased year on year (34 percent in 2019, up from 32 percent in 2018 and 30 percent in 2017).

Across Europe, male non-executive directors receive 5 percent (median) more in total fees than their female counterparts, which is an improvement of 1 percent from the prior year. The 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 are women. However, the number of women holding deputy chair/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 increased to 29 percent (up from 24 percent).

Across Europe the number of committees without any female directors also dropped, with 19 percent of audit committees (down from 24 percent) and 25 percent of remuneration committees (down from 29 percent).

“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 policy fee paid to directors across Europe is €70,000, with significant fee variations across the region, often based on time and responsibility commitment as well as local practice. Universally, Directors who are on a board committee, such as an audit committee or remuneration committee, 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 share of companies use variable compensation for non-executive directors, which stands in sharp contrast to practices in countries like the United Kingdom.

Fees delivered in shares are popular in countries like Switzerland and Finland but are almost unheard of in other countries like 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 full Non-Executive Directors in Europe 2019 report is available here, with more findings covering remuneration, board structure, director independence and board diversity. It also includes a European overview, country analyses and a profile of a typical European Board. About the research

Every year Korn Ferry conducts a study of the pay practices, structures and diversity of the Non-Executive Directors of leading European companies. The report examines 393 listed companies across 13 European countries, presenting a detailed picture of the trends across the continent. A full list of companies is provided at the end of the report.

About Korn Ferry

Korn Ferry is a global organizational consulting firm. We work with clients to design their organizational structures, roles and responsibilities. We help them hire the right people and advise them on how to reward, develop, and motivate their workforce. And, we help professionals navigate and advance their careers.