While people pursue board appointments for a wide range of reasons, it is helpful to know how much board members get paid. This information can help you better understand the potential financial return on your time investment in gaining an appointment.
How much are board members remunerated?
There is a significant disparity between the findings of board member remuneration surveys, plus there is no singular reliable source of data that covers the remuneration of all board members in Australia. Often surveys are industry-specific or rely on small sample sets.
However, taking an average of the findings from multiple* Australian remuneration studies conducted, we found that large non-listed companies and public companies pay Non-Executive Directors (NEDs) on average $74,595 per year; the smallest listed companies pay around $50-60k, with Independent Chairs averaging more than $80k; the average NED remuneration for a medium-sized private/unlisted company is $41,000, and when charities do pay their NEDs they $28,000 is typical.
How many organisations have boards?
David Maywald said in his well-researched Thought Piece on Board Remuneration and Director Fees in Australia, “There are approximately half a million governing bodies in Australia (with estimates ranging from 380,000 to 670,000). The medium scenario shows 520,000 governing bodies encompassing a variety of entities such as boards, committees, advisory boards, trustee boards, councils, body corporates, and school boards.”
How many organisations pay their board members?
David Maywald goes on to state that ASX boards represent a small fraction of remunerated boards in Australia (~10-15%), and the AICD estimates that there are 10,000-11,000 board seats established within ASX-listed companies. In total, they constitute a minuscule portion (less than 1%) of the total governing bodies nationwide, and ‘the largest number of governing bodies are drawn from incorporated charities, unincorporated NFPs, unlisted companies (private, medium to large size), and from body corporate structures.’
In total, David estimates that there are ~227,000 governing bodies that most people would commonly recognise as “boards,” which furnish 2.5 million governance positions in Australia. Across all categories, there exists a consistent correlation wherein larger organisations tend to offer higher director fees. It is also safe to estimate that about 17,000 boards are remunerating about 93,000 NEDs.
Who pays what?
People commonly believe that ~15% of charities pay their board members. However, David found that only 5% of registered charities provide director fees to their board members—notably lower than survey estimates. In stark contrast, approximately 96% of ASX-listed companies remunerate their directors. However, uncertainty looms over the extent to which unlisted businesses and private companies compensate their non-executive directors, marking this an area of low certainty.
While director fees for ASX-listed companies represent the visible portion of the iceberg, the bulk of volume and diversity lies beneath the murky waters. ASX-listed companies become less pertinent as the scale of director fees decreases
Are board director fees increasing?
Yes, but it is hard to tell by how much because NED fees do not increase on an annual basis but rather between a three-to-five-year interval. The best guess, according to multiple sources, suggests that: before Covid, the average increase in board fees was 4%, and many organisations reduced their fees during the pandemic – in some cases by 50%. In 2021/22, median director’s fees saw an increase of around 5% for the Chair and 4%. Many of the percentage increases for Chairs, Board Members and Committee Members ranged from 8-10% and within the ASX median increase in remuneration in 2022 of 2.15% for Chairs and 3.27% for other NEDs. This is lower than in 2023, where the median remuneration increase for Chairs and other NEDs was 3.79% and 4.36%, respectively, with an expected increase of 4% in 2024… it’s all very confusing.
In Summary
Some Non-Executive Directors (NEDs) get paid $1.8M from their various appointments, whilst others get paid nothing. The latter is truer for the vast majority of board members. However, whether paid or voluntary, the market for board seats is saturated, which means that, regardless of whether you are remunerated for your board seat, I guarantee that gaining a board appointment will be competitive.
Still, there are more people today considering board appointments than ever, and most already know or will quickly realise that a board appointment is not the financial gold mine they thought it might have been. Regardless, few care whether they are paid or not. Most people pursue board appointments because they recognise the wider benefits – they want to give back, recognise the career benefits of operating at board level, or believe this is where they can be most effective.
If you are considering a board appointment and would like some help, reach out to start a conversation.
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*AON, Guerdon Associates, David Maywald, AICD, McQuirk Management Consultants, Governance Institute of Australia, Glassdoor & Salary Expertmuch
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
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