Every day I deal with board members, prospective board members and senior executives. Every time the subject of board search is discussed, it inevitably rolls around to the issue of board remuneration. People ask me on a regular basis, "how much can I expect to be paid as a member of a board?" Well, today I can give you the latest figures and you have to agree, it's worth going after.
Being a paid board member is a dream of many
The amount a Non-Executive could earn depends on a number of different factors. The most obvious are:
- The type of role you are appointed to;
- The sector the organisation operates in;
- The type of organisation;
- The size of the organisation;
- The turnover of the organisation.
2018 increases were below what was expected but earnings for board members still look good
Boards remunerate their members in a number of different ways – including daily sitting fees, annual fees, expenses, equity and additional committee fees. As such, board remuneration studies can struggle to gather enough information to be accurate. One of the most accurate I have come across, is the survey conducted every year by McGuirk Management Consultants.
Results from just over 500 Boards show that increases in remuneration for Boards and Committees, MD's and CEO's and C-Suite Executives were below what one would have expected. Nonetheless, considering this is not full-time work and that you can build yourself a portfolio of board roles, it's definitely another reason for you to set your feet on the path to a board career.
How Much Do Board Members Earn?
First, let me mention that the increase in board remuneration over the past year had been less than one would expect. Of the listed companies in Australia, only 22% increased remuneration of their boards by a median amount of 10%. Only 15% of unlisted companies increased their boards' remuneration by a median amount of 5% and in the case of private boards, 15% of them increased remuneration by a median of only 3%. 15% of Not-for-Profit boards increased their remuneration (if any) by 3%.
According to McGuirk's figures, remuneration for board members are currently at the following levels:
- Listed Company Chair: $132,000
- Listed Company Director: $82,500
- Unlisted Company Chair: $70,985
- Unlisted Company Director: $41,606
- Private Company Chair: $61,800
- Private Company Director: $ 41,200
- NFP Chair: $41,200 (when paid)
- NFP Director: $20,100 (when paid)
Salary increases for Executives were also lower this year
Remuneration increases for Managing Directors and CEO's
To compare, McGuirk also released the increases received by CEO's and Managing Directors. In listed companies, 56% of them received an increase the median of which was 5%. In the case of unlisted companies, 57% received an increase in remuneration that averaged 3%. 61% of MD's and CEO's in private companies received an increase of 3% and 56% of Not-for-Profit organisations reported an increase of 3% for their MD's and CEO's.
Salary increases for C-Suite executives
According to McGuirk's preliminary results, C-Suite executives in different organisations received the following median increase in their salaries:
- Listed Companies: 5%
- Unlisted Companies: 3%
- Private Companies: 3%
- Not-for-Profit Organsiations: 3%
In Terry McGuirk's own words:
In a study from 500 Boards, twenty-eight percent (28%) received an increase. The stand-outs for me are that a lot of Boards did not increase remuneration at all last year, and the fact that a lot of MD/CEOs also did not receive any increase last year.
Developing a portfolio career can be lucrative. For many, becoming a paid board member is a major life goal. However, for many the opportunity to serve on a board for an organisation that they are passionate about is all the reward required.
Regardless of your motivation, board work is incredibly rewarding but requires dedication and passion. Even if being a paid board member is your goal, it shouldn’t be your only goal when it comes to your portfolio career.
To achieve your board aspirations, whether it is to be a paid board member or to serve the organisation or the community with passion, you need access to board opportunities and you need to know how to ‘dare them not to appoint you‘.
Board Remuneration Reviews
When Board Direction undertakes a Board/NED Remuneration Review we aggregate the results of other remuneration studies. The end result being that you are provided a report that as accurately as possible benchmarks your organisation against that of your peers – something no one else does. This in turn means that the findings you rely upon to remunerate your own directors will be robust and stand up to external and internal scrutiny.
About the Author
David Schwarz is CEO & Founder of Board Direction – Australia’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. He has been described as Australia’s leading board recruitment expert, is a published author, a regular speaker on the board appointment process and runs Board Search Masterclasses across Australia. He is one of Australia’s Top 10 LinkedIn users with over 25,000 connections. Email: [email protected]