Proposed AICD Constitution Amendments – AICD Director Remuneration

Like many not-for-profits across Australia, the AICD Board has been considering the pros and cons of director remuneration.

The question of whether to remunerate directors in the not-for-profit (NFP) sector has gained traction, especially for larger NFP/ Australian Charities and Not-for-profits Commission (ACNC) registered organisations, where regulatory compliance demands, governance complexities, responsibilities of office, personal liability risks and time and performance demands continue to increase, and as calls for board composition diversity escalate.

The AICD Board regularly reviews its governance structure and composition. It has become evident that the current constitutional constraints of not remunerating AICD directors may no longer be appropriate.

The AICD Board considered these matters and trends in the NFP sector, and sought to consult with members regarding the option to remunerate its directors.

The rationale for and against the payment of fees to AICD’s directors was outlined in the Discussion Paper as considered by members. At a high level, the rationale for the proposed amendments includes the following:

• Recognising the significant time, effort, expertise and statutory responsibilities of its directors: The time commitment required from the AICD’s directors, and in particular its Chair, is extensive. Offering remuneration acknowledges the substantial effort and expertise its directors contribute. 
• Attracting suitable candidates to the AICD Board: Remunerating its directors supports diversity on the Board by attracting individuals from a wider variety of backgrounds and those who may not be able to devote the time required without some compensation. 
• Member and stakeholder engagement: Compensating the AICD’s directors facilitates and supports their ability to actively engage with members and stakeholders in pursuit of AICD’s purpose and interests. 
• Not-for-profit sector trends: Trends in the NFP sector indicate an evidence-based rationale for remunerating the AICD Chair and directors. Many large NFP organisations have moved towards paying their directors given the increasing expectations and complexities of governance.
  

The director remuneration levels are proposed to be set by inviting AICD members to approve a relatively modest maximum aggregate director remuneration pool at the 2025 AGM, which will accommodate individual AICD director/Chair annual remuneration payments as follows:

• AICD Chair: $50,000 (including superannuation and inclusive of all Board committee and related responsibilities);
• AICD Director: $25,000 (including superannuation and inclusive of all Board committee and related responsibilities); and
• a modest contingency “buffer” to facilitate reasonable board succession planning and reasonable annual adjustments without having to frequently seek member approval for minor increases.

Financial analysis of the proposed AICD director remuneration indicates that the aggregate amount represents around 0.321% of anticipated actual operating revenue for FY25.