• Still only 10% of non-executive directors are women;
• Fees for non-executives grow faster than executive salaries, as demand for top independent talent continues

FTSE 350 companies are increasingly complying with the provisions of the Combined Code, however, a significant number still fail to meet the recommended 50:50 boardroom ratio of executive to non-executive directors, according to research by Deloitte. Independent directors make up less than half of the board at more than one in ten (11%) FTSE 100 companies and almost one third (29%) of FTSE 250 organisations.

Change to the composition of boards has slowed and the number of non-executive directors appears to have stabilised, after five years of rapid growth following the Higgs Review. The composition of the board has changed at 59% of FTSE 350 companies in the past 12 months, compared to 68% in the previous year and 76% in the year before that. Deloitte believes that this slowdown in boardroom change is positive news, even if not all companies comply with the Code.

Carol Arrowsmith, head of remuneration at Deloitte, commented: “For a number of years many boards have had to dedicate more focus to process and compliance issues than might be considered desirable. They will welcome a period of relative calm in the world of corporate governance to allow them to bring leadership and strategy back to the top of the agenda.”

A continuing area for concern, however, is the lack of female non-executive directors. Carol Arrowsmith added: “Unfortunately, we have not seen any significant increase in the diversity of the board in large UK companies. There has been a slight increase in the number of female FTSE 350 executive board members, from 3% to 4%, but no increase in the number of female non-executives. This is despite the fact that the total number of non-executive directors has increased by more than 10% in the past five years.”

The increased responsibilities of non-executive directors has had a significant effect on fee levels which continue to increase at a higher rate than has historically been usual for these positions and are currently slightly higher than increases in executive salaries. Total fees in the past year grew by 7.3% compared to 7.1% last year.

Carol Arrowsmith added: “Our research suggests that companies are now reviewing fee levels much more regularly, often annually, compared with only every two, or in some cases three, years, although a review does not always result in an increase in fees. Companies are also now far more likely to conduct a thorough benchmarking exercise along similar lines to those carried out for executive salaries.

“Our feeling is that fee levels will not continue to increase at this rate, but it’s not yet clear if increases will return to the 3% to 4% levels that were typical a few years ago. Although fewer companies are reporting difficulties in recruiting non-executive directors the complexity of the role will certainly not diminish and the demand for high quality individuals will continue.”

One emerging trend is the growing degree of structure around how the fees are determined. Typically, there will be a basic fee and then additional fees for the chairmanship of committees or the senior independent director role. The chairmanship of the audit committee tends to carry the highest additional fee, £15,000 in a FTSE 100 company and £7,000 in a FTSE 250 company. The chairman of the remuneration committee may get additional fees of £10,000 and £6,000 in FTSE 100 and 250 organisations respectively.

Other key findings:

• The median basic fee for a non-executive director in a FTSE 100 company is £52,750 compared with £38,250 in a FTSE 250 company;
• Typical fees for a non-executive chairman will be between 35% and 50% of the salary of the top full time executive in FTSE 100 companies and between 25% and 35% in FTSE 250 companies. This has not changed since last year;
• The appointed senior independent director is likely to receive an additional £10,000 in a FTSE 100 company, but only £5,000 in a FTSE 250 company.

Ends

Notes to editors:

About the report:
Deloitte’s Board Structure report is based on information from the latest report and accounts of companies in the FTSE 350 as at 30 June 2007, excluding 36 investment trusts. The data is taken from annual reports and accounts published before this date which includes companies with financial year ends up to and including 28 February 2007. A total of 314 companies are included in the analyses.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms.  Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ("DTT"), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other's acts or omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.