How Much Are Non Executives Remunerated?

paid board member Australia

A question that will undoubtedly come to mind as you start your journey to becoming a Board Member, is the question of how much you can expect to be paid as a member of a board.

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;

Recent remuneration findings

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 and they often use relatively small sample sizes – further compounding any inaccuracies.  Still it is possible to gather a strong sense of what you could expect to be paid if appointed to a board that remunerates.

The following remuneration reviews looked at different payment structures for Board Members:

Chair, Non-Executive and Committee member remuneration & allowances

Chair Remuneration

Study 1: A recent Australian study conducted found that Chairs were paid between $48k (medium unlisted) and $315k (ASX 200)  with the average Chair remuneration being $139k.

Study 2: A more recent study – and, I think, an arguably a better one, found that some chairs (of top percentile organisations by revenue) earned well over $600k and as little as $26. Looking at the remuneration, when considering the number of employees, found Chairs earn well over $700k and as little as $30k.

Non-Executive Remuneration

Study 1: Once again, using the data from the first study, we find that Non-Executive Directors are paid between $23k (small unlisted) and $137k (ASX 200) with the average being $61k.

Study 2: Using the alternative broader study again we find, based on the industry of an organisation (rather than its size) we observe quite wide differences in what Non-Executive Directors are paid – from as little as $3k for health care providers up to over $327k for Banking boards.

Based on the revenue of a company and the number of employees, here the lower remuneration fees are $9k (Revenue $51k – $99k) and $7k (<250 employees ) and up to $273k (Revenue $1.5m+) and $323k (10,000+ employees).

Committee Remuneration

When we look at Committee Remuneration, we found that somewhere in the region of 30%-40% of organisations pay additional fees to their board members for taking on committee responsibilities.

Considering the historical amounts that Committee Members (both Chair and regular committee members) are paid for some of the most common committees that you might sit on, we found that an Audit Committee Chair roughly earns twice that of a regular Audit Committee member – $38k and $19k respectively.

Allowances

In addition to Committee, Non-Executive or Chair remuneration, 21% of directors also received a professional development allowance. The average amount being $3,786 per director.

Conclusion

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 20,000 connections. Email: [email protected]