A leading stewardship expert has backed the idea that non-executive director pay needs a “rethink”.

Hans-Christoph Hirt, former head of stewardship services at Hermes EOS and now professor of  strategic governance at the International Institute for Management Development (IMD) in Lausanne, makes his LindkedIn comment in a response to a Financial Times editorial questioning boardroom pay.

Hirt says it may be “controversial” but he agrees that boardroom pay “deserves a rethink”.

“Having engaged with hundreds of chairs during my time as an investor, I’ve always found it intriguing how difficult they find conversations about their own pay.

“As investors increasingly expect boards to be much more involved and to make a real contribution that adds value — including on strategy — it seems a logical conclusion that both the level and the structure of board pay should be on the agenda in investor dialogue.”

Kimberly Lewis, head of active ownership at Schroders, expressed some sympathy with the view. “We’ve been doing lot of thinking around this issue as well,” she adds.

Higher executive pay has been on boardroom agendas since 2023 when London Stock Exchange chief executive Julia Hoggett called for increased pay if UK companies were to compete for talent internationally.

In recent months, the pay of non-executives has also become a talking point in business circles as it becomes increasingly clear that the work is changing.

In November last year watchdogs at the Financial Reporting Council (FRC) issued guidance  clarifying that NEDs can receive part of their pay in shares. The government had already declared its support for share-based pay.

Richard Moriarty, chief executive of the FRC, said: “This update will reinforce that companies can take varied approaches to structuring remuneration, provided they preserve director independence and are transparent with shareholders about their decisions.”

A month later, research from Alvarez & Marsal  concluded that non-executive fee levels in the FTSE 100 were 10% down in real terms over the past decade and well behind US companies who paid on average three times more.

However, A&M was also sceptical that shares alone were the answer if boards were to aim for higher remuneration levels, saying overall “quantum” was the “elephant in the room”.

“Aligning the UK market more closely with the US by paying a greater proportion of the NED fee in shares will not improve competitiveness, unless the level of fee is also addressed,” the A&M report said.

Elsewhere, top headhunter Kit Bingham, head of UK board practice at Heidrick & Struggles, wrote for Board Agenda that the UK had “reached a point where something needs to be done about non-executive pay.”

Those sentiments were echoed in a report from the Institute of Directors on the future non-executives. The report said: “NED remuneration should better correspond with demands, complexities and responsibilities of the role.

“Currently there is widespread perception among NEDS that compensation falls short in this respect, especially outside of large, listed companies, making it difficult to recruit ad motivate good NEDs.”

Non-executive is firmly in the sites of many City figures. Comments from Hans-Christoph Hirt signals that conversations between boards and investors may be about to take place.