Fee boost coming for Crown directors

Fees for the directors of 22 Crown-owned companies will be raised closer to the ‘market rate’ in order to attract high-quality directors, says State Owned Enterprises Minister Paul Goldsmith.

Directors of Crown-owned entities have long felt their fees were severely discounted when compared with fees for similar roles across the public and private sectors. In our Directors Fees Report 2024/25, produced by the IoD and EY, Crown-entity directors had a zero percent satisfaction with fees – meaning not a single respondent was happy – compared with a 65 per cent satisfaction rate across all directors.

“We have been advocating for an increase for director fees across the state sector for a number of years,” says IoD Chief Executive Kirsten (KP) Patterson. “We know from our own research that directors of state sector boards have been unhappy with remuneration levels.

“The role of a director is increasingly complex and the median hours worked has been steadily increasing, but remuneration is not keeping pace across many sectors, and this has been particularly so for directors in the state sector.”

Goldsmith says fees will be raised in two stages over the next two years. In 2025, they will be increased to around 85 per cent of the market rate. In 2026, they will be further increased to around 90 per cent of the market rate.

“Ordinary directors’ fees for these companies have been largely static for more than 15 years and have fallen significantly below market rate, some by up to 56 per cent,” Goldsmith says.  

“This is creating a major barrier to attracting and retaining directors with the commercial skills needed for Crown boards. Crown-owned companies, like private ones, are facing an increasingly complex operating environment. We can’t expect them to perform as well as their counterparts without giving them the means and direction to do so. Paying fair remuneration is a key part of this.”

Public sector board roles have traditionally been considered to have a ‘giving back’ component that includes lower fees than for similar private sector roles, says Patterson, and many IoD members serve on public or not-for-profit boards alongside their work with private commercial boards.

The Directors Fees Report 2024/25 showed 42.9 per cent of directors served on one or more trusts, while 39.9 per cent were on the governing body of one or more NFP organisations.

Many of those roles receive no payment – 20.7 per cent of all respondents were in a pro bono role – but most people take them on to support a cause (37 per cent) or give back to the community (36.7 per cent).

“While many directors express a willingness to ‘give back’ to their communities, anecdotal feedback to the IoD indicates many experienced directors were no longer willing to serve on Crown-entity boards because of the low remuneration levels,” says Patterson.

“This announcement will help to address these concerns. We look forward to seeing this fee increase extending to other public sector boards in due course.”