In summer 2008, we carried out our second annual survey on trustee board structure, performance and remuneration, aimed at helping trustee boards address a range of topical questions about key issues of trusteeship.

The questions addressed included:

• How can trustee boards attract and retain the right mix of trustees in order to maximise the board’s effectiveness? 
• Is paying trustees the answer – and if so, how much? To what extent has this shifted over the last year?
• Is there an increase in the use of independent trustees – and if so, why?
• What does “success” mean for the trustee board – how should it be measured, and what structure and training are needed to achieve it?

*Results are based on survey responses received by 5 September 2008. Unless stated otherwise, percentages stated are percentages of participants answering the relevant question.

Observations on findings

On six in ten trustee boards, at least one trustee is now remunerated, with a higher incidence of remuneration in larger schemes. This is by no means restricted to professional and independent trustees, although normally does not include active members. In a quarter of cases, the chair is remunerated, doubtless in recognition of the greater responsibilities of that role and because sometimes independent trustees are appointed to this position. Most frequently, payment policy is driven by the employer.

There has been a marked increase in the appointment of independent trustees, with the highest incidence among the larger schemes. We believe this reflects the increasing complexity of trusteeship, notably in the management of conflict of interest issues with sponsoring employers (an area where two-thirds of respondents now have a formal policy in place) and the need for particular expertise or experience.

The need for specialisation of the trustee board is increasingly acknowledged by virtue of the high prevalence of sub-committee structures − an effective means of discharging trustee business. Investment committees are in evidence for eight in ten funds, and governance committees are also enjoying a notably higher profile than last year. Essential to the success of a sub-committee structure are well-defined terms of reference and delegated authorities.

Not only are trustee role descriptions a useful way to set out clear expectations, responsibility and commitments, but they can be a useful tool in recruitment too. It is therefore interesting to note that, while there has been an improvement on the 2007 survey, over half of our respondents still do not have written role descriptions for their trustees. Perhaps of more concern, given the pivotal nature of the role, is the finding that seven in ten chairs do not have a role specification.

Similarly to last year, around a third of respondents have some difficulty in recruiting trustees. For these boards, experience suggests that promoting the role positively is helpful, as is clearly articulating what it involves and reassuring potential applicants that an appropriate level of support and training will be provided – most respondents in our survey, in fact, deliver a range of training, both generic and scheme-specific.

It is encouraging to note that around three-quarters of respondents undertake some form of performance evaluation, albeit not on a formal basis in all cases. Whatever the basis of evaluation, its efficacy relies on two factors: a commitment to ongoing improvement and therefore a willingness to have performance objectively tested, and  implementation of behavioural change in response to evaluation output.

 Request your copy of the Trustee board structure, performance and remuneration survey 2008 

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