You couldn’t make it up if you tried. Membership of the prestigious Institute of Directors has nearly halved over the last two decades but the new boss has been given a rise of a quarter more than his predecessor.

Stephen Martin, the IoD’s director general, was paid £452,000 in 2017 compared with the £355,000 earned by the former chief, Simon Walker. Yet over the last year, the IoD’s total membership base fell by nearly 6% to 32,034 while its core membership fell to 27,217.

Back in 1999, the IoD had 60,000 members but by 2005 this had fallen to 55,000. It has been dropping ever since. According to the IoD, the financial crisis in 2008 was the catalyst for the recent collapse in members at the Pall Mall directors club.

What members must be asking themselves is this: how could any self-respecting business grant its boss a pay rise when members are turning away, and it’s losing money? This hardly sets an example to current or past businessmen or women members about how a company should be run. Or indeed, to the wider public which will see Martin’s pay rise as yet another case of fat cattery. It’s also rather ironic as his predecessor made a point of scolding corporate chiefs about paying themselves so much.

So far the only explanation for this extraordinary decision to pay Martin more than Walker comes in a statement from the IoD’s spokesman that his pay was set by a “remuneration committee based on a market review and his experience in business.” The spokesman points out that his pay is lower than when the 52-year-old was chief executive of Clugston, a construction business.

The latest numbers are from the IoD’s annual report which show that membership income fell by 2.9 per cent to £11.2 million, and total income by 2.1 per cent to £26.5 million, leading to a deficit before tax of almost £1 million.

The IoD’s spokesman added that the results reflected investment “enhancing our membership offering” and that the IoD “remains in a solid financial position, with over £10 million in cash reserves”.

In which case, the IoD should be asking itself more thoroughly what else it should be doing to make the club more relevant to today’s workplace.

There are obvious reasons why membership is tailing off. After the crash, businesses became more careful about paying out fees for memberships across the board while social media has made life easier for people to network in cafes and bars as well as direct online.

Anecdotally, people say that they like using the IoD as a meeting place rather than for its networking or lobbying functions because of its prime location and handsome building. The fees, which include a £225 joining fee and £415 membership fee a year – are not that high but they are perhaps off limits if business people only want to use it for meetings.

At the same time, other members say the IoD should be spending more of its focus looking after the meatier interests of small business such as campaigning to reduce business rates rather than taking high-profile political positions as it did over Brexit.

Yet it must also look to its own reputation too, and the civil war which erupted earlier this year cannot have helped its public image. Lady Judge, its chairwoman, was suspended but offered to resign after she was taped – by the board – over allegations of bullying staff and making racist comments about them. Lady Judge, 71, refutes the allegations.

Giving the director general a pay hike at such a sensitive time for one of the UK’s oldest business associations is plain daft.