Board fees: retainer vs. sitting pay
- U.S. and South African board-pay data show non-executive directors are usually paid through annual retainers, not per-meeting sitting fees, even as online debate revives the question of which model best fits boards. - In the S&P 500, average total director pay reached $327,096 in 2024, with 58% delivered in stock awards; in South Africa, only 6% of sampled companies used a retainer-plus-meeting-fee structure. - The split reflects market practice more than theory: U.S. boards have cut meeting-fee use sharply, while JSE Top 50 companies still standardize on retainers for chairs and non-executive directors. (nacdonline.org) (spencerstuart.com)
Most large-company boards now pay non-executive directors with annual retainers, not a cash amount for each meeting attended. (spencerstuart.com 1) (spencerstuart.com 2) That matters because director pay has three moving parts: a cash retainer for serving on the board, extra pay for committee or leadership roles, and stock awards that rise or fall with the company. The National Association of Corporate Directors said board meeting fees are still used, but their prevalence fell from 23% of firms in 2018 to 10% in 2023. (nacdonline.org) In the S&P 500, average total director compensation rose 1.8% to $327,096 in 2024, according to Spencer Stuart. The average annual retainer was $144,077, up 0.7% from the prior year. (spencerstuart.com) U.S. boards also lean heavily on equity. Spencer Stuart said 58% of S&P 500 director pay came in stock awards in 2024, while cash accounted for 37% and stock options 3%. (spencerstuart.com) The same retainer-first pattern shows up in South Africa, where Spencer Stuart said remuneration practices are “fairly standardised” among JSE Top 50 companies. It reported an average retainer of R1,132,180 for non-executive directors in its 2024 snapshot. (spencerstuart.com) For board chairs in that sample, 86% were paid through a retainer only. Just 6% of organizations used a retainer plus meeting-fee structure, down from 38% of chairs paid through retainers and committee attendance fees a decade earlier. (spencerstuart.com) The case for retainers is straightforward: boards want directors paid for ongoing oversight, preparation, crisis work and availability between formal meetings, not only for showing up on the day. NACD said directors now face heavier oversight loads in areas including artificial intelligence, cybersecurity, human capital and economic risk. (nacdonline.org) That workload has increased faster than pay. NACD and Pearl Meyer said total direct compensation rose 4% across 1,400 companies in their 2023-2024 report, even as scrutiny and time demands on directors kept climbing. (nacdonline.org 1) (nacdonline.org 2) Boards still use hybrids in some cases, especially for committee work, special committees or smaller companies where meeting counts vary more widely. But the direction of travel in the data is clear: sitting fees are less common, while retainers and stock-based pay do more of the work. (nacdonline.org) (spencerstuart.com) The debate on X taps a real governance choice, but the current market evidence points one way. Large-company boards in the U.S. and South Africa already treat retainer-led pay as the default model for non-executive service. (spencerstuart.com 1) (spencerstuart.com 2)
