Non-executive director salary insights
Non-executive director roles are becoming increasingly attractive to professionals seeking a flexible yet influential position on a company’s board. Transitioning into non-executive directorship offers the opportunity to use your expertise, develop new skills, network to guide companies and gain both independence and flexibility.
This article explores the ins and outs of non-executive director salaries, the benefits of becoming an NED, and actionable steps on how to transition into these sought-after positions.
What is a non-executive director?
A non-executive director is a member of a company’s board of directors but is not involved in the daily management of the company. Instead, NEDs provide independent oversight and advice, bringing an external perspective to the organisation. Their responsibilities often include:
✅ Monitoring executive decisions and ensuring the company acts in the best interests of shareholders and stakeholders.
✅ Providing expertise in strategy, governance, risk management and other more specialised areas such as digital, HR, sustainability or business transformation.
✅ Attending board meetings and serving on subcommittees such as audit, risk, or nominations committees.
While non-executive directors are not involved in daily operations, they carry legal responsibility as office holders. This means they are accountable for the company’s actions, making it a role of significant influence and… exposure.
Why transition into a non-executive director role?
Professionals considering a shift into non-executive directorships often find the role appealing for several reasons:
1️⃣ Flexibility. NEDs work part-time, attending board meetings and contributing strategic insights. For experienced professionals, this role offers the chance to maintain career momentum while enjoying greater work-life balance. For mid-career professionals, the role is an opportunity to develop new skills such as strategic thinking and accelerate their executive career.
2️⃣ Strategic influence. As a non-executive director, you provide valuable input at the highest level of an organisation, influencing decision-making and long-term strategy.
3️⃣ Networking. Serving on a board can broaden your professional network, providing connections in business and governance.
4️⃣ Financial compensation. NED roles can be remunerated and a source of income although salaries vary widely depending on the size and type of organisation.
Salary and compensation insights for non-executive directors
One of the factors in attracting professionals to non-executive directorship roles is the potential for compensation. Let’s break down what you can expect in terms of pay:
1. Salary for non-executive directors
Non-executive directors in the UK earn £15,000 to £90,000 annually, depending on the size of the organisation, its complexity, size and the specific responsibilities of the role.
AIM 100 companies offer a NED median salary of £53,000[1]. The median base fee for FTSE 100 companies is £77,000[2] and for FTSE SmallCap £37,000[3].
Large private companies typically offer compensation comparable to AIM listed companies (around £50,000).
Medium-sized and small private companies tend to offer lower fees, often in the £10,000-£15,000 range per year.
When it comes to startups, where resources are limited, equity is likely to be part of the compensation package.
In sectors such as the NHS or education, NEDs are often paid lower fees or, in the case of charity trustees, may be unpaid.
For NHS non-executive directors, a single annual rate of £13,000 applies. For chairs, ranges apply according to turnover and complexity.
2. Factors affecting NED compensation
Several factors influence NED compensation:
- Company size. Larger, more complex organizations tend to pay higher fees.
- Sector. Certain industries, such as financial services or investment trusts, often pay more than sectors like non-profits.
- Time commitment. Some roles require a commitment of 1-2 days per month, while some board positions will take you 1 day per week.
- Committee roles. Serving as the chair of a subcommittee typically comes with additional pay. The amount varies widely depending on the complexity, size, market cap of the organisation as well as its sectors and the nature of the committee.
Audit committee chairs are typically better remunerated than nominations or remuneration committee chairs! For example, at FTSE 100 companies, the median (additional) non-executive fee for the audit committee chair is £25,000 vs. £21,000 for remuneration and £17,000 for nomination2.
Steps to become a non-executive director
Becoming a non-executive director is a strategic career move that requires both networking and preparation. Here are some key steps to help you make the transition:
👉 Build your expertise
NEDs are sought after for their knowledge, experience, and ability to provide independent advice. To make yourself an attractive candidate:
- Highlight your industry experience, leadership skills, and specific areas of expertise.
- Demonstrate your ability to work at a strategic level and contribute to long-term decision-making.
👉 Network and build relationships
Many NED roles are not openly advertised, so networking is crucial. Attend industry events, conferences, and seminars to meet other professionals and board members.
Additionally, you may join an organisation, such as NEDonBoard, Institute of Board Members, to access a dedicated jobs board (140 to 160 live roles on offer every week).
You may also use social media to connect with executives, headhunters, and current non-executive directors and promote your expertise. Consider reaching out to executive search firms that specialise in placing NEDs.
👉Pursue non-executive director training and certification
To stand out, consider obtaining a professional qualification, such as the NED Accelerator® Programme. Such a non-executive director training course can equip you with a deep understanding of board responsibilities, governance practices.
👉 Start small
If you are new to NED roles, you may want to start with a smaller company or a charity. These roles provide excellent experience and can act as stepping stones to larger board positions.
Legal and professional considerations for NED roles
While non-executive directorships offer flexibility and influence, they also come with significant responsibilities. As a director, you have a legal duty to the company, which includes ensuring compliance with laws and regulations. This can expose you to personal liability if the company faces legal or financial difficulties.
Moreover, reputational risk is another key consideration. It’s essential to thoroughly research any company before accepting an NED role to ensure it aligns with your values and reputation.
Becoming a non-executive director can be a highly rewarding career move for professionals looking for strategic influence, flexibility, and financial compensation. While the role demands expertise and legal responsibility, it also offers the opportunity to make a meaningful impact on a company’s success.
By setting the salary expectations at the right level and following the steps outlined in this guide, you can position yourself as an attractive candidate for NED roles and take the next step in your professional journey.
[1] BDO AIM 100 Directors’ Remuneration Report March 2024
[2] Alvarez & Marsal Non-Executive Director fees in the FTSE All-Share October 2023
[3] Nurole FTSE SmallCap Compensation Report 2024
