How Much Do Non Executive Directors Get Paid? A Guide to NED Remuneration

This guide explores how much Non-Executive Directors can expect to be paid, the factors influencing NED remuneration, and the typical structures of compensation packages.

Understanding Non Executive Director Remuneration

Unlike executive roles, NEDs do not receive salaries or performance-based bonuses.  Instead, they are typically paid an annual fee for their services, which covers attendance at board meetings, committee work, and any additional time commitments.

NED remuneration varies significantly across different sectors and company types.  In the UK, for example, the average NED fee ranges between £30,000 and £80,000 per year, but can be considerably higher for large publicly listed companies.

How Much Do Non Executive Directors Earn?

1. FTSE 100 and FTSE 250 Companies

• FTSE 100 NEDs: £80,000 – £150,000 per year
• FTSE 250 NEDs: £50,000 – £100,000 per year
• Chair roles often receive significantly higher fees, sometimes exceeding £300,000 per year.

2. Private Companies

• Remuneration is generally lower than public companies, often in the range of £20,000 – £60,000 per year, depending on company size and industry.
• Some high-growth private firms and unicorn startups may offer equity-based compensation rather than large cash fees.

3. SMEs and Startups

• Many small and medium-sized enterprises (SMEs) pay between £10,000 and £40,000 per year for NED roles.
• Early-stage startups may offer equity or share options instead of cash payments, particularly if they have limited budgets.

4. Public Sector and Non-Profit Organisations

• Government bodies and NHS trusts typically pay between £10,000 and £25,000 per year.
• Charities and non-profits often pay lower fees (or none at all), with some offering expenses only. However, larger non-profits may offer remuneration up to £20,000 – £30,000 per year.

For further information, take a look at this NED fees report which provides a detailed breakdown of all types of NED fees, including Chair fees, NED base fees, Committee and Senior Independent Director (SID) duties, and Employee NED roles.

Factors influencing NED Pay

Several key factors determine how much a Non-Executive Director earns:

1. Industry Sector

• Financial services and regulated industries (such as banking, insurance, and healthcare) tend to offer higher fees due to the complexity of governance and regulatory requirements.
• Technology and high-growth startups often compensate with a mix of cash and equity options.
• Manufacturing, retail, and hospitality sectors typically pay lower NED fees.

2. Company Size and Complexity

• Larger, more complex organisations require more board involvement, leading to higher fees.
• Companies with international operations or regulatory challenges may offer higher remuneration to attract experienced NEDs.

3. Time Commitment

• Standard NED commitments include 4–10 board meetings per year, along with committee meetings and preparation time.
• NEDs serving on multiple board committees (e.g., audit, remuneration, risk committees) often receive additional fees.

4. Chair and Senior Independent Director (SID) Roles

• Chair roles typically pay 2–3 times more than standard NED roles due to greater responsibilities.
• The Senior Independent Director (SID), who acts as a lead NED, may receive a premium fee above standard board members.

How Are NEDs Paid? Compensation Structures Explained

NEDs are compensated through a fixed annual fee rather than a salary or performance-based bonus. Common remuneration structures include:

• Fixed Cash Fees – The most common form of payment, often paid quarterly or annually.
• Committee Fees – Additional fees for serving on audit, risk, or remuneration committees.
• Equity and Share Options – More common in startups and private equity-backed firms, where NEDs receive shares instead of high cash fees.
• Expense Reimbursement – Travel and meeting expenses are usually covered, particularly for international roles.

Can NEDs Earn Additional Income?

Many NEDs hold multiple board positions, allowing them to build a portfolio career.  Some experienced professionals serve on 2–5 boards, potentially earning £100,000 – £300,000+ annually across multiple roles.  However, balancing commitments is crucial to maintaining effectiveness and credibility.

Final Thoughts

Non-Executive Directors play a vital role in governance, and remuneration varies significantly based on sector, company size, and responsibilities.  While FTSE 100 and large private firms offer high fees, smaller businesses and charities may provide lower compensation but valuable experience.

For those considering an NED career, understanding pay structures and commitment levels is key to securing a rewarding and financially viable board position.

For further reading take a look at this article written by Tim Dare, Managing Director at Mosaic Search & Selection, who talks through his own experiences and benefits of being an NED.