How much do board members get paid?
How much do board members get paid is a question often asked by students and members of the Corporate Governance Institute. The answer always begins with the words ‘it depends’.
The compensation for board members and non-executive directors varies greatly. A lot depends on the sector, the weight and experience of the board member, the country where the board sits, and the organisation’s earnings – the bigger the business, the bigger the pay for directors.
Spencer Stuart suggests non-executive director fees in the UK range from an average of £43,200 in a FTSE SmallCap up to approximately £83,000 at the top end of the FTSE 100. Recruitment firm Board Appointments suggests the average retainer for a non-executive director in the UK is £70,000.
A part-time chairperson in the UK could expect to be paid £400,000 in 2019. Chairs of FTSE 100 companies made as much as £425,000.
Board members are becoming younger
The traditional view of a boardroom is a stuffy old place filled with people best described as male, pale and stale. This is no longer the case. Boards are very keen to recruit younger, more diverse members, people who represent society.
For example, KPMG’s benchmark analysis suggests the average age of a director on a company board in Ireland was 57. The average age for a male director was 59, and a female director was 51, and as a benchmark, the average remuneration of company directors was €40,000 to €60,000 in 2020. The pay for chairpeople was an average of €166,563.
In the US, board member pay can be substantial
In the US, the median compensation for members of private company boards of directors was $42,750 in 2020, according to a global study by Lodestone Global.
However, the US is a nation of heavy hitters, and big boards pay very well. According to executive compensation firm Veritas, compensation for board members can easily reach $300,000 to $500,000 a year.
What type of people make it onto boards?
The more abilities and skills you can bring, the better. Recently, many companies have begun to seek more racial and gender diversity on their boards.
The qualities of an effective board member include:
- Experience in high-level government work
- Positions as a manager and leader in certain sectors
- Launching and running a successful startup
- Serving on other boards
Digital transformation skills are now in massive demand, as is knowledge and experience in cybersecurity.
An example of a very high-paying board
If you want to see how far director pay can go, you just have to look at the world of the megacorps. For example, Apple’s non-executive directors each receive approximately $250,000 worth of restricted stock units per year. Non-executive directors also receive an annual cash retainer of $100,000.
The board’s chair at Apple gets an additional $200,000; the audit committee chair receives an additional $35,000; the compensation committee chair receives an extra $30,000; and the nominating committee chair receives an additional $25,000.
Non-executive directors also get every new Apple product for free on request and purchase more at a discount. Excellent work if you can get it.
Watch David W Duffy, CEO of the Corporate Governance Institute explain what makes an effective and in-demand board member.
How much board members are paid varies greatly
How much board members get paid is down to many factors. If you want to join a board, there are a few things you should do:
- Get certified: Certification is vital to ensure you understand how a boardroom works and the duties and responsibilities of a company director.
- Network: You won’t find board positions without looking for them and letting people know you are interested.
- Find the board position that excites you: I don’t think being on a board is an easy way to earn a few quid. It is a demanding role, so make sure you are passionate about the sectors you are targeting.
Further reading: eBook: How to get a role on a board
If you think you have what it takes to join a board of directors, why not take the Diploma in Corporate Governance (below)? Download the course brochure to find out more.