In challenging times more people than ever gravitate to board appointments and for good reason. 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 more easily than those who don’t.
Beyond these many benefits, board appointments can also offer a much-desired supplementary or portfolio income. How much you could earn I have listed below. I provide you with these figures as a guide rather than a hard and fast list of what you might earn. I take this approach because the figures below should be used to inform you in your decision making, to help you know when you are getting ‘low balled’ and to help you better understand the potential return on your time investment.
According to a study conducted by Spencer Stuart, the average retainer for a Non-Executive Director (NED) increased by just over 1% over the past year, with the total remuneration of Non-Executives growing by less than 1%. Add to this the fact that 22% of boards have 5 or more committees and that committee members often receive additional payment over and above their primary board remuneration.
Whilst no-one’s primary motivation should be to join a board for the money, for many a board appointment can facilitate a healthy additional income.
But how much do board members in the UK get paid? Well, NED fees range from an average of £43,200 in a FTSE SmallCap, up to approximately £83,000 at the top end of the FTSE 100. Let’s break this down further so you can have a better idea of exactly what you can expect to be paid as a Non-Executive Director.
Remuneration of Chairs in the UK
The average retainer for a part-time Chair serving on a board in the UK during 2019 was £404,544. Chairs of FTSE 100 companies earned as much as £425,000 last year, while the Chairs of FTSE 250 companies earned an average of £230,000.
Chairing a committee brings in additional payment. Risk Committee Chairs receive the highest payment, with an average of £38,914. On average, the Chairs of FTSE 100 Audit Committees received an additional £23,000 per year and Remuneration Committee Chairs received an extra £21,700. In the case of FTSE 250 companies, Audit Committee Chairs received £11,700 and Remuneration Committee Chairs were paid an additional £10,700.
Senior Independent Director (SID) Remuneration
Most UK companies pay an additional fee to their Senior Independent Directors. The average for these fees is £22,853, with the lowest being paid £3,000 for the year and the highest additional fee paid for a SID reaching a whopping £375,000. The average total fee for SIDs who served for the full year was £115,378.
Non-Executive Director Remuneration
The average retainer for a Non-Executive Director in the UK in 2019 was £69,238. Non-Executive Directors sitting on the boards of FTSE 100 companies, got paid an average of £70,000 last year. The difference in remuneration of NEDs between FTSE 100 and FTSE 250 companies was not as big as with Chairs, with Non-Executive Directors sitting on FTSE 250 boards earning an average of £54,000. Non-Executive Directors serving on FTSE SmallCap companies earned an average of £43,200.
Remuneration of Charity Trustees
Trustee roles are typically unpaid (only one in 10 are - and not very much), although many charity boards (and their committees) 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.
However, this is not a reason not to consider a Charity board appointment. With the numerous advantages of serving on a board that I mentioned before, a Charity board may be the right fit for you.
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 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.
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 over a decade of experience of 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