Studies have shown people who have board appointments: are unemployed less, have better relationships (that can be leveraged), can evidence strategic experience (that help with a promotion), have more successful retirements, and transition into new roles or consultancy careers more easily than those who don’t.
Moreover, according to Harvard Business Review, those who hold a board appointment in addition to an executive role earn 13% more and are 44% more likely to be promoted than their peers who don’t. Compelling statistics!
Beyond these many benefits, board appointments can also offer a much-desired supplementary or portfolio income. This is why so many aspiring NEDS ask “how much do UK non-executive directors get paid”?
How much do UK non-executive directors get paid?
Whilst remuneration is just one of the seven rewards for serving on a board, for many a board appointment can afford a healthy additional income.
FTSE Chair Remuneration
According to Spencer Stuart average total remuneration for part-time chairs of FTSE 350 companies is £372,980, a decrease of 10% over the past year and the most significant fall in the past seven years. The decline returns total chair remuneration to 2016 levels.
A similar change is observed in the average chair fee, which decreased by 6%, arriving at £387,019 in 2021 compared to £411,406 in 2020.
FTSE Senior Independent Director (SID) Remuneration
Most UK companies pay an additional fee to their Senior Independent Directors (SID). A SID is appointed to provide a sounding board for the chairman and to serve as an intermediary for the other directors when necessary.
Most companies (93%) offer an average additional fee of £22,246 for the senior independent director role, a 3% reduction compared to 200 (£23,015). The fees range from £2,000 at International Public Partnership to £83,838 at Experian.
The average total fee for SIDs is £115,709, 5% less than last year’s average of £121,389, marking the first reduction in the past six years. Senior independent directors who served the whole year received an average total remuneration of £111,994, including the basic and additional fee for the role plus committee membership when applicable.
FTSE Non-Executive Director Remuneration
Basic (base) non-executive retainers have increased by 2%, from £69,606 in 2020 to £70,785 in 2021. This rise keeps up with a trend identified since 2014, and it is the highest average fee recorded to date.
Additional remuneration is paid for Committee Chairs and members as noted below.
Small-Cap Chair & Non-Executive Director Remuneration
According to Alvarez & Marshal Chairs serving on FTSE SmallCap companies earned an average of £143,500. For Chairs for lower quartile businesses £119,500 and upper quartile businesses £173,300.
For Non-Executive Directors the average is £60,000 with lower quartile businesses paying £54,000 and upper quartile businesses £69,000
Additional remuneration is paid for Committee Chairs as noted below.
Small-Cap Committee Fee
FTSE Committee Fees
Most companies (95%) reward non-executive directors with an additional fee if they chair or are a member of the audit or remuneration committee. (The only exception is for the chairs of nomination committees who also chair the main board: they do not receive an additional fee for chairing the nomination committee.)
The average fee for chairing an audit committee is £25,035, similar to last year’s average of £24,976. The fees range from £80,000 to £5,000. Sixty per cent of companies offer an audit committee member fee, at an average of £15,424, a minor decrease (3%) compared to last year’s average of £15,879.
Remuneration committee fees for both Chairs and members increased only slightly. Chair fees went from £21,937 in 2020 to £22,117 in 2021 (1% increase), and member fees went from £13,475 in 2020 to £13,812 in 2021 (2% increase).
Private Company Director Remuneration
According to Dynamic Boards defining the remuneration of private companies’ board directors is difficult. Commonly, anything upwards from £3,000 up to around £50,000, or more for much larger companies.
Private companies are more likely to appoint Board Advisers (rather than appointing them as legal directors) and these too can vary hugely in pay – anything from £2,000 upwards.
Start-Up Board Remuneration
Some start-ups might offer a mix of remuneration, such as a low level of directors fees and in addition, may offer shares in the company. Early-stage businesses, particularly those with external investment, (e.g. angel investment or early-stage VC), may consider seeking a Board Advisor rather than a Non-Executive Director.
Charity Trustee Remuneration
Trustee roles are typically unpaid (only one in 10 are – and not very much), although many charities do pay for trustees’ expenses or pay trustees for certain services rendered. However, this is strictly governed and certain requirements have to be met for this to happen.
There are some common exceptions though:
- Housing Associations now typically pay their board members – anything from £3,000 a year up to more than £20,000 for chair roles of large associations.
- Pension Trusts’ director’s fees were an average of £20,000 per year in 2019.
- Investment Trusts paid their non-executive directors an average of £30,000-50,000 in 2020.
NHS Trusts and Foundation Trusts all have boards of non-executive directors. At the moment (in 2021) NHS Trusts have a fixed pay of £6,157, which is set by the Secretary of State. NHS Foundation Trusts set their own pay, meaning a much greater variation – ranging from £7,000 to £21,000 for non-executives. By 2022 all NHS trusts and foundation trust board members will be paid £13,000 a year.
Is the remuneration worth it?
For some, these figures seem that UK non-executive directors get paid a lot of money for part-time roles. What one needs to consider is that none of these roles is without risks. The risks the UK directors face include: Financial; Legal Limited Control; Time; and Reputation Read the full article here
Whilst people pursue board appointments for a wide range of reasons it is useful to know how much you might get paid. For many, you will soon recognise that a board appointment is not the financial gold mine you might have thought it would be. Most people don’t pursue a board appointment for the money. Rather, they recognise the wider benefits, want to give back, or recognise that operating at board level is where they can be most effective.
Despite the risks and dubious financial benefits, board appointments remain highly aspirational for many. Indeed, for every individual who says ‘no’ to a board appointment, I can guarantee you that there are 10, 20, or a hundred more who will take it if offered to them instead. So, if you desire a board appointment you need a plan. Board Appointments can help and perhaps the best way to start is to attend one of our Virtual Board Search Events.
About the Author
David Schwarz is CEO & Founder of Board Appointments – The UK’s leading board advertising and non-executive career support firm. He has almost two decades of experience in putting people on boards as an international headhunter and a non-executive recruiter and has interviewed over one thousand non-executives and placed hundreds into some of the most significant public, private, and NFP roles in the world.