Serving on the board of a major public company represents an important responsibility. Directors fulfil a vital governance role by providing oversight and guidance to steer the strategic direction of the organisation. While directorships at nonprofits and small businesses are often unpaid volunteer positions, most medium and large public corporations provide remuneration to directors in recognition of their significant time commitments and contributions.

Well-structured compensation enables companies to attract and retain qualified, skilled directors to serve in these critical oversight positions. This article explores the typical paid board roles along with how director remuneration is determined.


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Key Paid Board Roles

Board Chair

The chair leads the board of directors and presides over board meetings. Key duties encompassed within the role include:

  • Setting board meeting agendas and leading board discussions
  • Facilitating constructive debate, encouraging diverse viewpoints, and guiding decision-making
  • Ensuring the board satisfies its legal and regulatory governance requirements
  • Overseeing board processes such as director evaluation, succession planning, and refreshment
  • Serving as the link between the board and senior management
  • Representing the company externally to stakeholders

The substantial time commitments and increased legal risks assumed by the chair warrant greater compensation relative to other board members. Typically, the chair's fees range from 2-3 times those of a regular independent director.

Committee Chairs

To improve efficiency and enable closer oversight of priority issues, corporate boards frequently establish specialised committees dealing with matters like audit, risk, remuneration, and director nominations. 

The committee chair leads members through the group's specific obligations, including:

  • Developing committee calendars, meeting agendas, work plans, and reporting back to the full board
  • Presiding over committee meetings and providing leadership to steer group processes
  • Guiding the committee through its charter and delegated responsibilities
  • Ensuring the committee fulfills its purpose and completes required tasks
  • Keeping the broader board regularly updated on committee work, findings, recommendations, and minutes

In recognition of the expanded workload, committee chairs receive supplementary fees above their basic pay as a director. Committee chair fees commonly equate to around 1.5 times those of a regular committee member.

Non-Executive Directors

Non-executive directors concentrate on high-level oversight and governance guidance. Core activities include:

  • Preparing for and participating in board and committee meetings
  • Reviewing materials and providing expertise on strategic issues
  • Monitoring corporate performance, strategy, risk, and accountability
  • Representing the interests of shareholders

Base fees for non-executive directors compensate them for their foundational contributions. Those also serving on committees earn additional fees on top of their basic pay.

Executive Directors

Executive directors such as the CEO simultaneously manage company operations while holding a board seat. They spearhead implementing strategy and bear responsibility for financial performance.

Rather than collecting director fees, executive director pay is determined under their executive employment contract. Remuneration emphasises performance-linked elements like share options. An executive director’s remuneration is often significantly higher and includes a larger proportion of performance-based incentives, such as bonuses and stock options, compared to non-executive directors.

How Director Pay is Determined

For public companies, shareholders must approve the pool of fees available to compensate non-executive directors, generally based on recommendations put forward by the board and remuneration committee. When evaluating appropriate pay levels, considerations include:

  • Scope of individual workloads, responsibilities and performance
  • Company size, complexity of operations, and financial performance
  • Remuneration offered to directors at comparable organisations
  • Alignment of director incentives with long-term shareholder interests
  • General economic climate and market conditions

The aggregate pool acts as the maximum total for non-executive director fees. The board then decides on allocation to individuals within the approved pool. There is an increasingly significant role for external remuneration consultants, who provide benchmarking and advice to ensure director compensation is competitive and aligned with industry standards.


Listed companies must report director and executive remuneration details, policies, and outcomes in the Annual Report as mandated under the Corporations Act. The Remuneration Report section elucidates the company's compensation structures, incentive programs, performance hurdles, and actual pay awarded to directors and executives.

Transparent disclosure and reasonable pay help demonstrate good governance and build shareholder trust that remuneration practices are aligned with their interests.

Elements of Director Pay Packages

While specific practices differ across companies, director remuneration often encompasses:

  • Base fees for core directorship duties, typically a flat annual amount
  • Committee fees for the extra work of serving on board committees, either an annual fee or per meeting fee
  • Superannuation guarantee contributions, currently 10.5% of total fees (This rate is subject to legislative changes and scheduled to incrementally increase to 12% by July 2025)
  • Performance-based bonuses tied to targets like share price or profit growth

Other components like equity compensation, retirement benefits beyond superannuation, and non-monetary perks may be included but are less common for non-executive directors. Companies also reimburse directors for costs like travel related to board work.

Carefully developed compensation enables companies to secure skilled directors to fill these vital governance functions. Following sound policies around pay structure fosters sustainable board composition and shareholder confidence.

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