Setting the level
Estimate the time commitment. Count board and committee meetings, preparation, strategy sessions and any ad hoc work. Fees should reflect a realistic number of days per year.
Choose comparators carefully. Listed company board fees are publicly disclosed and provide useful reference points, but a private company's board may carry a different workload and different responsibilities. Size, complexity and sector matter as much as ownership status.
Consider the profile you need. An independent director with deep audit or industry experience may expect more than a generalist. Where the business needs specific expertise, the fee should be sufficient to attract it.
Keep it simple. A small number of clear fee elements is easier to explain to shareholders and to future investors than a complex mix.
Governance points
- Fees should be approved through a clear process, ideally with input from a remuneration or nomination committee where one exists.
- Family shareholders who also sit on the board as executives should be paid for their executive role separately from any board fee.
- Write fee arrangements into appointment letters, including how fees will be reviewed.
- Review fees every two to three years, or when the board's workload changes significantly.
For listed companies, board remuneration is subject to specific legal requirements and disclosure. Private companies preparing for a listing should align their practice early.
How Humatix can help
Humatix benchmarks board and non-executive director fees for private, family and listed companies in the GCC, taking account of time commitment, committee structure and the profile of directors the board needs.
