In a stark revelation about corporate governance in Hong Kong, the pay for independent non-executive directors (INEDs) of listed companies in 2024 ranged from a mere 6,000 yuan (US$867.94) to an eye-watering US$1.67 million, highlighting a disparity nearly 2,000 times over and raising serious questions about boardroom talent and independence.
The findings come from a survey conducted by the Hong Kong Independent Non-Executive Director Association (HKINEDA), which analyzed the 2024 annual reports of more than 2,600 listed companies. This extreme gulf in compensation outstrips disparities seen in other major markets, potentially signaling challenges in attracting quality talent at the lower end and compromising director independence at the higher end.
Experts warn that such a wide pay gap could undermine the ability of INEDs to uphold strong governance and effective risk management. The role of these directors is crucial in providing objective oversight, yet the compensation variance suggests inconsistencies in how their responsibilities are valued across firms.
“Too wide of a disparity may indicate quality issues with attracting talent in the case of low fees, or a lack of independence if fees are too high,” said Robert Lee Wai-wang, lawmaker for financial services. He emphasized the need for balance, adding, “Striking a proper balance helps companies attract suitable personnel to join boards.”
At the pinnacle of the pay scale was United Company Rusal, Russia’s largest aluminium producer, which compensated its top INED with US$1.67 million. In stark contrast, Haina Intelligent Equipment International, a Fujian province-based producer of automated machines for manufacturing disposable hygiene products like baby diapers, paid its lowest-earning INED just 6,000 yuan.
While some variation in fees is expected based on specific roles and skill sets, the Hong Kong survey underscores a troubling trend that lawmakers and governance advocates are urging companies to address to bolster board effectiveness.
