In this article, we shed light on what non-executives in the UK actually get paid. The role of a non-executive director today is far from the boardroom stereotypes of smoking jackets, whiskey and private members clubs with panelled walls.
How do NEDs get paid?
Non-executive directors of companies can typically expect to be paid a director’s fee and often the amount is fixed and clearly explained in the advertised vacancy. You might get £15,000 per year for being a Non-executive Director, an additional £5,000 for sitting on the Risk Committee, and a further £10,000 for a Chair role, and you wouldn’t usually expect to negotiate on this. Sometimes companies won’t state the amount up front and will negotiate on appointment, though this is less common.
The fees will usually be paid monthly like a salary, but as you are not legally an employee, the pay is usually described as ‘directors fees’. NEDs do not typically receive any other employee benefits, pension payments, or bonuses. While the Executive directors are likely to have an element of performance-based pay (e.g. as bonuses), NEDs do not. NED income is subject to tax and most companies will pay your tax for you (like normal P.A.Y.E.), though some will pay you gross, so you will need to file a self-assessment tax return.
So, how much do NEDs get paid?
The quick answer is that, like any job, it varies a lot. It depends on the size and type of organisation, and on whether you take on any more responsibility like being on a committee or becoming the Chair.
For listed company boards there is a vast range. FTSE 100 NED fees range from £70,000 to £94.000 with a median of £76,000, and Chair fees range from £350,000 to £632,000 with a median of £440,000.1 FTSE 250 companies range from £54,000 to £65,000 with a median of £58,000 and Chair fees range from £194,000 to £290,000 with a median of £235,000.2 FTSE SmallCap companies paid their NEDs a range from £45,450 to £57,250 with a median of £51,600, and their Chairs a range from £130,730 to £200,000 with a median of £160,000.3 The median NED pay for the AIM 100 companies in 2022 was £55,000.4
Getting data on private company boards is more tricky, but through tracking the fees for hundreds of private sector roles advertised on Dynamic Boards we’ve seen an average NED annual fees of £15,000, with a vast range up to £90,000. Likewise Chair fees vary with an average of £28,000 and a range up to £170,000.5
Pension Trusts median trustee remuneration in 2022 was c.£60,000 for chairs and c.£30,000 for independent board members.6
Investment Trusts (‘London-listed investment companies’) Directors fees varied enormously. In 2022 NEDs were paid an average of £32,757 with a range of £15,400 to £100,000, and Chairs were paid an average of £50,002 with a range of £16,500 to £165,000.7
Some start-ups might offer a mix of remuneration, they may offer shares in the company and a low level of directors fees. 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.
We occasionally see adverts for ‘Investing Non-Executive Directors’: individuals that invest in a business and are offered a Director seat on the board. These roles are unlikely to also be paid directors fees. At Dynamic Boards we don’t advertise roles that require you to invest in order to be offered a seat on the board as we feel their ‘ask’ is primarily for investment not independent board members so they are better suited to advertising on funding platforms.
Housing Associations in England and Wales typically pay their board members, whereas those in Scotland and Northern Ireland typically don’t. Across England and Wales NED pay ranges from £0-£25,000 with 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 largely correlated to the size of the organisation.8
NHS Trusts and Foundation Trusts all have boards of non-executive directors. Since 2022, all NHS trusts and foundation trust Non-Executives have been paid on a standardised framework: NEDs are paid between £13,000 and £19,000, and Chairs are paid between £40,000 and £63,300 (exact amounts depend on the size of the Trust and the responsibilities the individual has).9
Not-for-profits operating as Charities generally don’t pay fees to their board members, but will pay expenses. Some large not-for-profits may pay their Chairs, or some board members, in recognition of the considerable work the role entails. Education boards (School Governors, Higher Education boards, University Councils) generally don’t pay their board members, though there are an increasing number of exceptions e.g. Bradford University pays their Chair £20,000, and Corndel College London pays their NEDs £12,000 per year.
Is it worth it?
On balance, we’d say yes! NED work can give you the chance to contribute to the good governance of UK organisations, use your skills and experience, and get paid. To some, NED fees might seem like a lot of money for a part-time role. Afterall, some Non-Executive Directors are paid more than some full-time professionals, despite working only a few days a month on average. However, while this may be the case on paper, the reality is often very different.
We want to see the best possible mix of candidates, by skills, experiences and perspectives, finding their way on boards so we provide free access to NED roles (here). But, before you dive in to viewing board roles, here’s a few things to consider:
- Time commitment: A typical NED role will require at least 10 days a year and it can be much more than that; the commitment for the Chair of a FTSE 100 company might be up to three days a week. The pay generally stays the same no matter what happens during the year, so at times of crisis or change non-execs may need to put in much more time. Generally the NED community wouldn’t describe it as a fast way of getting rich. So, if you’re in it for the money, you might be in the wrong game!
- Legal liability: As a director of the company, you are responsible for the business and its future. This is a lot of responsibility for a role where you might only meet with your fellow board members in person once every one or two months. This isn’t a ‘job’ that you do for ‘x days a month’, it’s a responsibility that you carry with you 24/7, you are still a Director of the company when you aren’t in board meetings.
- Reputation: You’re associating yourself – both legally and formally – with a company and what happens to that company. You might not have input on every decision, and if something goes wrong you will be involved throughout and will have the reputational fallout. Of course, if it does well, there are reputational gains to be made, too.
Whether you are a candidate looking for your next board role and researching pay or an organisation looking for some information on how to pay your NEDs, we hope you have found this guide on Non-Executive pay useful.
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1 – Director remuneration in FTSE 100 companies
2 – Remuneration in FTSE 250 companies – 2022 report
3 – Executive remuneration in FTSE Small Cap companies 2022
4 – AIM Director’s Remuneration Report 2023
5 – Based on the 362 private sector roles listed on Dynamic Boards from May 2020 to November 2023.
6 – The PwC Trustee Pay Survey 2022 Lite Report
7 – Trust Associates – Investment Company Non-Executive Directors’ Fees Review 2022
8 – Based on 687 Housing Association roles listed on Dynamic Boards from May 2020 to November 2023.
9 – Terms and conditions of NHS trust Chairs and Non-executive Directors