How much do UK Non Executive Directors get paid?

FTSE Chair Remuneration

According to Spencer Stuart, there has been a 7% increase in average total pay for chairs, arriving at £433,935 in 2023 compared to £404,915 in 2022.

FTSE Senior Independent Director (SID) Remuneration

A senior independent director is appointed to provide a sounding board for the chairman and to serve as an intermediary for the other directors when necessary. For SID’s there has been a 6% increase from £72,051 in 2022 to £76,868in 2023.

Most UK companies pay an additional fee plus committee memberships where applicable to their Senior Independent Directors (SIDs). The average additional fee is currently £28,505, a 32% increase over 2022 (£21,653). 

Additional fees for SIDs range from £5,000 at LondonMetric Property and Games Workshop to £200,000 at HSBC.

While there has been a 7% increase in average total pay for chairs and a 6% increase for senior independent directors over the past year, this is most likely a reflection of the cost-of-living crisis. It is important to note that 2021 annual reports reported a drop in average pay for chairs and senior independent directors in response to the Covid crisis. The current average total pay for both these roles remains lower than if an annual increase of circa 2% had continued to be applied through the crisis. The average total remuneration of a chair is 3.5x that of a SID and 5.6x that of a non-executive director.

FTSE Non-Executive Director and Committee Remuneration

The average base fee for a non-executive director had increased by 2% yearly for the past decade and reached £72,051 in 2022. 2023’s average of £76,868 represents an increase of 7%. Experian pays the highest non-executive director base fee of £150,914, and Watches of Switzerland pays the lowest at £50,000. Additionally, 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 average fee for chairing an audit committee is £10,000. The fees range from £11,500 to £8,000. This type of fee remains uncommon in the Small Cap market, with less than 10 percent offering them. Where in place, they are usually set at around £5,000. 

Small-Cap Chair & Non-Executive Director and Committee Remuneration

According to Alvarez & Marshal’s “Non-executive director fees in the FTSE all-share” 2023 report, Chairs serving on FTSE SmallCap companies earned an average of £165,000. For Chairs in lower quartile businesses £140,000, and for upper quartile businesses, £200,000. For Non-Executive Directors here, the average is £52,500, with lower quartile businesses paying £50,000 and upper quartile businesses £59,000. Additional remuneration of between £11,500 and £6,500 is paid to the Audit, Remuneration, ESG or Nomination Committee Chairs, which represents an increase of between 2%-5%.

Private Company Director Board Member Remuneration

Defining the remuneration of private companies’ non-executive board directors is difficult, plus the information is not always publicly available. We estimate the average NED annual fees are ~£15,000, with a vast range of up to £90,000. Likewise, Chair fees vary, with an average of £28,000 and a range of up to £170,000. Private companies are also 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 lower level of directors fees and shares/equity 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. Perhaps only one in ten are, and often not very much. Most charities do pay for trustees’ expenses or pay trustees for specific services rendered. However, this is strictly governed, and specific requirements have to be met for this to happen. There are some common exceptions, though:

• • Housing Associations typically pay their board members an average of £5,601, and Chair pay ranges from £1,500 to £40,000 with an average of £11,641. Sub-committee chair roles (e.g. Chair of Audit & Risk or Chair of Remuneration and Nominations) generally see their pay as based on the NED pay with an additional amount, e.g. £5,000 for the additional responsibility. As with other types of organisations, Housing Association pay is primarily correlated to the size of the organisation.
  • Pension Trusts’ director’s fees were an average of £30,000 per year, and for Chairs £60,000 in 2022.
  • Investment Trusts paid their non-executive directors an average of £32,757 in 2022, from £15,400 to £100,000 in 2021.
  • NHS Trusts and Foundation Trusts all have boards of non-executive directors. At the moment (in 2024), NHS Trusts have a fixed pay of £13,000 which is set by the Secretary of State. For chairs, it is intended that ranges will apply according to respective trust designations (i.e. groups 1 to 5) based on organisations’ size (annual turnover) and complexity. Variation between lower and upper quartile values should be a function of the role’s relative complexity and the chair’s skills and experience. The ranges are consistent with the structure associated with very senior manager (VSM) remuneration.

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. One must consider that none of these roles are without risks. UK directors’ risks include Financial, Legal Limited Control, Time, and Reputation.

In Summary

Whilst people pursue board appointments for various reasons, it is helpful to know how much you might get paid. For some, a board appointment is not the financial gold mine they thought it would be. Others seek a portfolio of board roles to secure a healthy income. However, it is my experience that most people do not pursue a board appointment for the money. Instead, they recognise the broader benefits, want to give back or recognise that operating at the board level is where they can be most effective.

Despite the risks and debatable 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. 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 my Virtual Board Search Events.