What are the Current Trends in NED Remuneration?

It is a truth universally acknowledged that everyone wants to be paid in a way they feel to be consistent both with the demands of the role and with their own fitness for it.

NEDs are no exception. We’ve identified several trends relating to NED remuneration worldwide:

The reality of NED remuneration

This first is not so much a trend as a constant: many NEDs think they are insufficiently remunerated. They feel it doesn’t adequately reflect their fiduciary responsibilities nor the increasing time commitment to discharge their duties properly, and there is a sense that the overall risk/reward curve is skewed as a result.

The package mix

The U.S. is comfortable with a cash-and-equity mix to NED remuneration, but this isn’t the case everywhere.

In the UK, the Corporate Governance Code itself has not fundamentally changed its stance, but updated FRC guidance in November 2025 has materially clarified and softened previous market practice, introducing more flexibility around equity-based remuneration for NEDs, while continuing to prioritise NED independence as paramount.

More German companies are considering it too, although some in Germany see equity as mitigating against impartiality.

Some geographies are concerned that equity stakes may encourage NEDs to take actions that finesse the share price. In France, for instance, remunerating directors with company shares is not prohibited, but is subject to strict regulation and remains relatively uncommon for NEDs of listed companies. The key concern being less one of legality than of the potential impact on directors’ independence and on shareholders’ perception of that independence.

In Australia, the Open Director Report has been monitoring national board remuneration for the last few years, and it notes that for large companies, cash-and-equity packages have increased in number, while for smaller companies the remuneration package is more closely tied to the performance of the business, so there is a greater element of risk.

Reemphasising the value of NEDs

External shareholder advisers, also known as proxy advisers, are widely regarded as ill-informed when they question executive rewards, but many senior people in business also feel proxies don’t see the value that NEDs bring, either. Some companies, however, are bowing to external pressure and have proved reluctant to increase packages.

By contrast, other boards are increasingly pushing back on the misconceptions of proxy advisers, and are calling them out publicly on it.

Geography and sector

External observers have different views about different geographies. For example, they tend to regard U.S. board positions as comparable to running global enterprises and accept that NED remuneration should reflect this. But when the same observers address companies of the same size but which are not U.S.-based, they don’t see them in the same light, which is why they expect NED packages outside the U.S. to be smaller.

Many jurisdictions have different rules. In France, the shareholders approve the overall remuneration pool allocated to the board members. The board of directors determines how this pool is allocated among the individual directors. In Germany, there are both management boards and supervisory boards. The supervisory boards’ packages are split between a low fixed fee and much higher attendance fees, to encourage active participation.

Sectors are a factor too. For example, in Australia board directors in banking, mining, and FMCG tend to attract better packages than those in other sectors.

The significance of demographics

Traditionally, NED roles have represented a late stage in people’s careers. In broad terms, people progressed from learning and doing, through leading, to a board position. More recently, though, this path has been changing, and demographics have played a part in it.

Why? Because boards are appointing NEDs at a younger age, and people are taking advantage of it. Instead of looking for another major role, they are looking to diversify their NED portfolios.

Divergence between Chairs and boards

In several geographies, Chairs, both of boards and of committees, are paid more equitably than NEDs. They are deemed to be more accountable, to bear more of the risk. This divergence is growing.

For board Chairs, the gap is widening because these are figurehead roles, and organisations want to attract top talent that investors will recognise. For committee Chairs, it’s because companies want to add visible technical capability. For instance, an audit committee will be deemed more robust if its Chair is a former CFO or a former partner of an audit firm.

Remuneration practices will continue to vary across geographies and sectors; Chairs will continue to be better compensated because of the value they add; and the average age of NEDs is likely to remain lower than hitherto. In addition, though, and more importantly, responsibilities will continue to increase; scrutiny will do the same; and to a growing extent NEDs are being held to higher standards.

All of which reflects a recent Institute of Directors (IoD) report which concluded: “NEDs need to be remunerated in a way that better reflects the complexity, time demands, and responsibilities of the role.”

And rightly so…