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European independent directors paid up to 100 times more than others

Business MeetingThe variation in remuneration for European independent directors on fund boards is significant, ranging from €1,000 to over €100,000 per year, per director, according to research by Fitz Partners.

The research firm's report found that directors who are the sole independent director for their fund board are paid substantially more than directors who are one of multiple independent directors on the same board.

The number of independent directors on a board also varies by jurisdiction. In, Luxembourg fund boards have fewer but better-remunerated independent directors than on Irish boards, Fitz Partners found.

However, Ireland has more independent directors than in Luxembourg. Two thirds (66%) of fund boards in Ireland have two to three independent directors on average. In Luxembourg, this number reduces, with the majority of fund boards (60%) having only one or two independent directors.

The research found that pay is not only determined by jurisdiction but also by fund products and the level of assets covered. Independent directors who cover over 100 products are paid twice the average fee of independent directors who cover 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 of the Fund Boards Council in the UK, said there was a known variability of fees between directors and that more research into why there is "such variability" between remuneration levels was needed.

He said factors at play included director’s experience, the number of board roles they carried, and the complexity of investment strategies that some directors oversee.  

Fitz Partners analysed 340 fund ranges across Luxembourg and Dublin, managing €3.4 trillion.

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