By Alvin Foo

SINGAPORE companies kept a tight rein on fee increases for non-executive and independent directors in the last financial year, despite more frequent board meetings and, in some cases, increased revenue.

A study of about 180 listed companies shows that half either kept average director fees at the same level or reduced them last year.

The firms surveyed include the 30 companies comprising the benchmark Straits Times Index as well as most mid-cap firms and some small-cap ones.

Although many local listed companies were still growing last year, there was a 'general reticence' to increasing director fees, noted Freshwater Advisers, which conducted the study.

'Our analysis shows clear signs that companies are being cautious with directors' fees in these difficult times,' said Freshwater managing director Jon Robinson.

'Even though (non-executive and independent directors) costs are typically less than 0.1 per cent of revenue, companies do want to show that they are sensitive to shareholders' concerns.'

About 28 per cent of companies studied reduced such fees by a median average of 11 per cent, while 21 per cent kept fees the same.

The half which increased average fees did so by a median average of 17 per cent, with 73 per cent of these companies also reporting a rise in revenue.

The average fee for non-executive and independent directors rose by about 7 per cent from 2007 to 2008 - from $50,000 a year to $53,540 - as the amount of increases was larger than the decreases.

Directors were also being called on to work harder last year, said Freshwater. The number of board meetings increased by 6 per cent and audit committee meetings by 7 per cent.

Mr Robinson said: 'Many companies are having to scrutinise results more closely, change strategic direction and, in some cases, replace key people - all of these activities take increasing amounts of board members' time.'

Mr Robson Lee, a partner at law firm Shook Lin & Bok and an independent director on a number of boards, said there was a need to pay independent directors 'adequately'.

He said this would 'engender a culture of good corporate governance', adding that it would 'make commercial sense for good independent directors to take up the legal responsibility of being audit committee members'.

Industry experts do not expect fees for non-executive and independent directors to rise much, given the challenging economic climate.

Mr Peter Lee, managing consultant of Remuneration Data Specialists, pointed out: 'Most companies had already increased fees before 2007, when corporate governance was being actively promoted, so do not expect fees to increase much, especially during these difficult crisis-ridden times.'

Corporate governance expert Mak Yuen Teen said of the study findings: 'It's a good tone to set if the company is cutting salaries and laying off employees and directors also take a cut in fees - even if it's more symbolic than having a substantive impact on bottom line.'

Mr Mak, the co-director of the Corporate Governance and Financial Reporting Centre, also noted that a median fee of around $50,000 is 'quite competitive', as the boards and committees here are not quite as active as those in other developed markets.

He added: 'Higher fees are warranted if non-executive directors here start committing that kind of time that (those) in countries like Australia and Britain do.'

This article was first published in The Straits Times.