Practical Guide to Board Member Fee Benchmarking

Board member fee benchmarking is often treated as a simple question: “What are other directors paid?”

That is the wrong starting point.

The better question is:

What level of board fees is fair, defensible and competitive for the responsibilities, workload, risk and complexity of this company?

For ASX-listed companies, non-executive director fee benchmarking is not just a remuneration exercise. It is a governance exercise. Directors need to be paid enough to attract and retain capable people, but the fee structure also needs to preserve independence, withstand shareholder scrutiny and fit within the company’s approved fee pool.

A good board fee review should help answer four practical questions:

1. Are our director fees competitive?
2. Are our Chair and committee fees appropriate?
3. Is our total fee pool large enough for the board structure we need?
4. Can we explain the outcome clearly to shareholders?

This guide explains how to benchmark board member fees in a practical, ASX-listed company context.

1. Understand what makes board fee benchmarking different

Board fee benchmarking is not the same as executive pay benchmarking.

Executives are paid to run the company. Their remuneration often includes fixed pay, short-term incentives and long-term incentives. Non-executive directors are paid to govern the company. Their role is oversight, challenge, stewardship and accountability.

That distinction matters.

Non-executive directors usually receive fixed fees. They generally do not receive performance-based bonuses because that could compromise independence. A director should be able to challenge management, reject a transaction, question strategy or take a conservative risk position without worrying about whether that decision affects their own bonus.

So, when benchmarking board fees, the question is not: “How do we incentivise directors?”

The question is:

How do we fairly compensate directors for the time, skill, accountability and risk involved in governing this company?

2. Start with the board’s actual workload

The first practical step is to understand what directors are actually doing.

Many fee reviews begin with market data, but this can miss the point. Two companies may have the same market capitalisation but very different board workloads.

For example, a stable listed investment company may have a very different board workload from a mining company with safety risks, capital projects and environmental approvals. A fast-growing technology company may require heavy oversight of cyber risk, global expansion and capital management. A financial services business may require intense regulatory and risk committee work.

Before looking at peers, document the actual board workload.

Consider:

• number of scheduled board meetings;
• number of special board meetings;
• number of committee meetings;
• time spent on strategy sessions;
• investor engagement;
• site visits;
• regulatory matters;
• capital raisings;
• acquisitions or divestments;
• crisis management;
• litigation or investigations;
• safety or operational risk;
• sustainability and climate oversight;
• cyber and technology risk;
• executive succession; and
• stakeholder engagement.

A practical board fee review should include a workload summary.

Practical table

Area	Current position	Fee benchmarking implication
Board meetings	10 scheduled meetings plus 4 special meetings	Higher than standard workload
Audit and Risk Committee	6 meetings plus additional audit sign-off sessions	Committee Chair fee should reflect workload
Remuneration Committee	4 meetings plus executive incentive review	Standard to moderate workload
Major projects	One acquisition and one capital raising during the year	May support temporary workload recognition
Regulatory exposure	High safety and environmental obligations	Supports comparison with complex operating peers

This step is important because board fees should reflect work, not just company size.

3. Clarify what you are benchmarking

A board fee review can cover several different things. Be clear about the scope before collecting data.

The review may include:

• Chair fee;
• base non-executive director fee;
• Deputy Chair fee;
• Senior Independent Director fee;
• Audit and Risk Committee Chair fee;
• Audit and Risk Committee member fee;
• Remuneration Committee Chair fee;
• Nomination Committee Chair fee;
• Sustainability Committee Chair fee;
• Technology or Cyber Committee fees;
• special purpose committee fees;
• travel allowances;
• equity fee sacrifice arrangements;
• superannuation treatment;
• total fee pool; and
• whether the board needs shareholder approval to increase the fee pool.

The review should also confirm what is not being benchmarked. For example, executive director remuneration should usually be reviewed separately from non-executive director fees.

4. Check the fee pool before changing fees

For ASX-listed companies, the aggregate non-executive director fee pool is critical.

The fee pool is the maximum total amount that can be paid to non-executive directors as a group, usually approved by shareholders. Before recommending any fee increases, the company should check:

• the current approved fee pool;
• actual fees paid last year;
• forecast fees for the current board structure;
• proposed fee increases;
• additional committee fees;
• possible future board appointments;
• superannuation treatment;
• whether fees for extra services count toward the pool;
• remaining headroom; and
• whether shareholder approval will be needed.

This is where many companies get caught. A fee increase may look modest at the individual director level but may create pressure on the total fee pool once committee fees, Chair fees and future appointments are included.

Practical fee pool table

Item	Amount
Current shareholder-approved fee pool	$1,200,000
Current annualised board fees	$920,000
Proposed annualised board fees	$1,020,000
Remaining headroom after proposed changes	$180,000
Potential additional director appointment	$120,000
Remaining headroom after potential appointment	$60,000

The board should avoid running the fee pool too tightly. A fee pool with no headroom can restrict board renewal, succession planning and committee flexibility.

5. Build the right peer group

Peer group selection is the heart of board fee benchmarking.

A weak peer group gives a weak answer. A strong peer group can be explained clearly to directors, management, shareholders and proxy advisers.

For ASX-listed companies, peer selection should usually consider:

Market capitalisation

Market capitalisation is commonly used because it reflects company scale, investor profile and market expectations. But it should not be the only factor.

A practical approach is to consider companies within a reasonable range around your company’s market capitalisation. For example, companies between half and twice your market capitalisation may be a useful starting point, but this should be adjusted based on sector and volatility.

Revenue, assets or enterprise value

For some companies, market capitalisation can be misleading.

A mining exploration company may have a large market cap but limited revenue. An infrastructure company may have large assets but stable operations. A financial services company may be better compared using funds under management, assets or regulatory complexity.

Use the measure that best reflects the company’s true scale and governance burden.

Industry sector

Sector matters because board risk and workload vary by industry.

A resources company, bank, health care company, technology business and consumer retailer may all be listed on ASX, but their board responsibilities can be very different.

Where possible, include companies from the same or adjacent sectors.

Complexity

Complexity can justify different fee levels even where market capitalisation is similar.

Consider:

• international operations;
• regulatory intensity;
• safety exposure;
• environmental obligations;
• workforce size;
• capital intensity;
• cyber risk;
• financial leverage;
• M&A activity;
• stakeholder scrutiny; and
• public profile.

Board structure

A company with a large committee structure may need a different fee approach from a company with a simpler board model.

For example, a company with separate Audit, Risk, Remuneration, Nomination, Sustainability and Technology Committees may have a higher total director workload than a company with only two committees.

6. Use more than one benchmarking lens

A practical board fee review should not rely on one data point.

Use several lenses:

Market peer comparison

Compare fees against selected ASX-listed peers.

Sector comparison

Compare against companies in the same industry or with similar operating risk.

Size comparison

Compare against companies of similar market capitalisation, revenue, assets or enterprise value.

Workload comparison

Compare based on number of meetings, committee responsibilities and complexity.

Historical movement

Review how fees have changed over time. If fees have not changed for five years but workload has increased significantly, that matters. If fees were increased recently, further increases may require stronger justification.

Internal affordability

Consider the company’s financial performance, cost discipline and employee wage environment. Director fee increases during periods of weak performance require careful explanation.

The best reviews triangulate these lenses rather than relying on a single median.

7. Benchmark the Chair separately

The Chair role should always be benchmarked separately from other non-executive directors.

The Chair’s workload is usually materially higher. The Chair manages board effectiveness, works closely with the CEO, leads shareholder engagement, handles director dynamics, supports succession planning and often represents the board in sensitive matters.

A Chair may be involved in:

• CEO performance and succession;
• crisis response;
• investor meetings;
• regulatory engagement;
• major transactions;
• board renewal;
• governance issues;
• stakeholder concerns; and
• media or reputation matters.

The Chair fee is usually expressed as a multiple of the base non-executive director fee.

For example, a Chair fee may be two to three times the base director fee depending on company size and complexity. The appropriate multiple should be tested against market data, not assumed.

Practical table

Role	Current fee	Market median	Market range	Proposed fee
Chair	$300,000	$340,000	$300,000–$390,000	$330,000
Non-executive Director	$120,000	$130,000	$115,000–$150,000	$130,000

The Chair fee should reflect the role’s actual demands, not simply a mechanical percentage uplift.

8. Benchmark committee fees carefully

Committee fees are often where board fee structures become outdated.

The Audit and Risk Committee is usually the most demanding committee, especially for companies with complex financial reporting, internal controls, risk, cyber, sustainability reporting or regulatory exposure.

The Remuneration Committee may also carry significant workload, particularly where the company has complex executive incentives, shareholder strikes, CEO transition, workforce issues or major organisational change.

Other committees may include:

• Nomination Committee;
• Sustainability Committee;
• Safety Committee;
• Technology Committee;
• Investment Committee;
• Project Committee;
• Risk Committee; and
• Disclosure Committee.

When benchmarking committee fees, look at both the Chair and member fees.

Practical table

Committee role	Current fee	Market observation	Proposed approach
Audit and Risk Committee Chair	$30,000	Below market for companies of similar complexity	Increase to $40,000
Audit and Risk Committee Member	$15,000	Around market median	No change
Remuneration Committee Chair	$20,000	Around market median	No change
Sustainability Committee Chair	$0	Committee workload has increased materially	Introduce $20,000 fee

Do not create committee fees just because other companies have them. Create them where there is real workload and accountability.

9. Be careful with special fees

Sometimes directors do work beyond normal board duties. For example:

• participating in a major transaction committee;
• leading a CEO search;
• handling a crisis;
• providing additional technical expertise;
• attending extensive regulatory meetings;
• chairing a special litigation committee; or
• supporting a major restructuring.

The company may consider special fees, but these should be used carefully.

Special fees can create governance questions:

• Was the work genuinely beyond normal director duties?
• Was the fee approved properly?
• Does it fit within the fee pool?
• Could it affect independence?
• Is disclosure required?
• Could shareholders view it as excessive?
• Should the fee be temporary rather than permanent?

A practical approach is to document the reason, duration, amount and approval process.

Example wording

During the year, the Board established a temporary Transaction Committee to oversee the proposed acquisition of XYZ. Given the significant additional workload, the Board approved a temporary additional fee of $X for the Committee Chair and $X for Committee members. These fees were paid within the shareholder-approved non-executive director fee pool.

Special fees should be the exception, not the default.

10. Consider whether fees should be paid partly in equity

Some companies allow or require non-executive directors to receive part of their fees in equity, or to build a minimum shareholding over time.

This can align directors with shareholders, but it must be structured carefully.

The key distinction is this:

Equity as part of fixed director fees can support alignment. Performance-based equity can undermine independence.

A non-executive director should generally not receive performance rights or options that vest based on company performance. However, a director may receive shares purchased from after-tax fees, participate in a fee sacrifice share plan, or be required to hold shares equal to a percentage of annual fees.

A practical minimum shareholding policy might require directors to build and maintain a shareholding equal to one year of base board fees within five years of appointment.

When considering equity-based director fees, check:

• shareholder approval requirements;
• tax treatment;
• trading policy restrictions;
• whether shares are issued or purchased on-market;
• whether participation is voluntary or mandatory;
• disclosure requirements;
• independence implications; and
• shareholder expectations.

11. Do not benchmark to justify a pre-decided increase

One of the biggest governance risks in fee benchmarking is reverse engineering.

That happens when a board already wants a fee increase, then selects peers or data points to justify it.

This is dangerous because shareholders and proxy advisers may challenge:

• why the peer group was chosen;
• whether larger companies were overrepresented;
• whether underperforming company results were ignored;
• whether workload really increased;
• whether the fee pool increase is too large;
• whether the timing is appropriate; and
• whether the board considered shareholder experience.

A credible fee benchmarking process should be able to show:

• the data used;
• the peer selection criteria;
• the current position against market;
• the workload context;
• the proposed changes;
• the fee pool impact; and
• the rationale for the board’s judgement.

The conclusion should follow the evidence, not the other way around.

12. Decide the right market position

Many companies say they want director fees to be “market competitive.” That is not specific enough.

The board should decide its intended market position.

For example:

• Chair fees targeted around market median;
• base director fees targeted between median and 75th percentile for comparable companies;
• committee Chair fees targeted at median;
• no change to committee member fees;
• fee pool sized to allow one additional director and reasonable committee flexibility.

The right position depends on the company.

A high-complexity company may need above-median fees to attract directors with specialist capability. A smaller company with constrained cash may decide to pay below median but explain that it reviews fees regularly. A company under shareholder pressure may defer increases even if fees are below market.

The key is to be deliberate.

13. Factor in board skills and future composition

Fee benchmarking should not only reflect the current board. It should support the board the company needs next.

For example, the board may need directors with experience in:

• cyber security;
• artificial intelligence;
• digital transformation;
• mining operations;
• clinical trials;
• global supply chains;
• capital markets;
• financial services regulation;
• sustainability;
• major projects;
• government relations;
• customer experience; or
• international growth.

If the board needs scarce skills, fee competitiveness matters.

Board renewal is becoming more complex. Good directors have choices. If fees are materially below market, the company may struggle to attract the right candidates, especially for committee Chair roles with high workload and risk.

This does not mean fees should automatically increase. It means the board should understand whether its fee structure supports its future skills matrix.

14. Think carefully before asking shareholders to increase the fee pool

If the company needs shareholder approval to increase the non-executive director fee pool, the explanatory memorandum should be practical and transparent.

Shareholders will want to know:

• current fee pool;
• proposed fee pool;
• size of increase;
• when the fee pool was last approved;
• current usage of the fee pool;
• expected future usage;
• whether the increase is for immediate fee increases or future flexibility;
• whether the board expects to appoint additional directors;
• how the proposed pool compares to peers;
• whether directors will vote their shares; and
• why the increase is in shareholders’ interests.

Practical explanatory wording

The current aggregate non-executive director fee pool of $X was approved by shareholders in 20XX. Since that time, the Company has grown materially, board and committee workloads have increased, and the Company has established an additional Risk and Sustainability Committee. The proposed increase to $Y is intended to provide flexibility for future board renewal, succession planning and committee responsibilities. The Board does not intend to use the full amount of the increased fee pool immediately.

This wording is more credible than simply saying the increase is “to allow market-competitive director fees.”

15. Consider timing and optics

Even a well-supported fee increase can be poorly timed.

Before approving increases, consider:

• company performance;
• share price performance;
• dividends;
• employee wage increases;
• restructuring or redundancies;
• shareholder sentiment;
• recent remuneration report vote;
• proxy adviser feedback;
• public controversy;
• capital raising activity; and
• broader economic conditions.

For example, a board fee increase immediately after a difficult year, workforce reductions or a poor shareholder return may attract criticism even if the market data supports it.

That does not mean fees can never increase in tough years. It means the board needs a stronger explanation.

16. Prepare a clear recommendation paper

A board fee benchmarking paper should be concise but complete.

A practical paper should include:

1. Purpose of the review.
2. Current board and committee fee structure.
3. Current approved fee pool and headroom.
4. Peer group selection criteria.
5. Benchmarking results.
6. Workload analysis.
7. Proposed fee changes.
8. Fee pool impact.
9. Shareholder approval implications.
10. Disclosure implications.
11. Recommendation.

Practical recommendation table

Role	Current fee	Proposed fee	Change	Rationale
Chair	$300,000	$330,000	+10.0%	Below market median; increased investor and governance workload
NED base fee	$120,000	$130,000	+8.3%	Aligns with market median for peer group
Audit and Risk Chair	$30,000	$40,000	+33.3%	Increased risk, cyber and sustainability reporting oversight
Remuneration Chair	$20,000	$20,000	0.0%	Current fee remains market competitive

The recommendation should explain not only what is changing, but why.

17. Suggested practical benchmarking process

A strong board fee benchmarking process can follow these steps:

Step 1: Confirm the scope

Decide whether the review covers all board fees, selected roles, committee fees, the fee pool, equity arrangements or all of the above.

Step 2: Collect current fee data

Document current Chair, director and committee fees. Include superannuation treatment and any special fees.

Step 3: Review the fee pool

Calculate current usage, proposed usage and remaining headroom.

Step 4: Document workload

Summarise board and committee meetings, special projects, regulatory issues and any increase in responsibilities.

Step 5: Select peers

Choose peers based on size, sector, complexity and governance workload.

Step 6: Compare fees

Benchmark Chair fees, base director fees, committee Chair fees, committee member fees and total board cost.

Step 7: Analyse gaps

Identify where fees are below, at or above market. Do not overreact to small differences.

Step 8: Apply judgement

Consider company performance, affordability, shareholder sentiment, board renewal and future skills needs.

Step 9: Model fee pool impact

Check whether proposed changes fit within the existing approved pool.

Step 10: Prepare recommendation and disclosure

Document the rationale in a way that can be used for board papers, shareholder materials and the annual report.

18. Common mistakes to avoid

Do not use only market capitalisation and ignore workload.

Do not compare a small company with much larger companies unless there is a clear reason.

Do not benchmark Chair fees as if the Chair is just another director.

Do not forget committee Chair workload.

Do not ignore superannuation when modelling the fee pool.

Do not run the fee pool with no headroom.

Do not introduce special fees without clear governance.

Do not use performance-based incentives for non-executive directors.

Do not increase fees simply because the market median moved.

Do not ask shareholders for a large fee pool increase without explaining how it will be used.

Do not forget the optics of increasing board fees in a poor performance year.

19. Boardroom questions to ask before approving fee changes

Before approving board fee changes, directors should ask:

• Can we explain the peer group?
• Are we comparing ourselves with companies of similar scale and complexity?
• Have we considered actual workload?
• Are Chair and committee fees appropriately differentiated?
• Does the fee pool have enough headroom?
• Do we need shareholder approval?
• Are the proposed fees affordable and defensible?
• How will shareholders view the timing?
• Are we preserving director independence?
• Does the fee structure support future board renewal?
• Would this recommendation still look reasonable if challenged at the AGM?

These questions help move the review from data collection to governance judgement.

20. Final thought: board fee benchmarking is about fairness and trust

Board fee benchmarking should not be a defensive exercise. It should be a disciplined way to ensure directors are paid fairly for the work, accountability and risk they take on.

For ASX-listed companies, the best approach is practical and transparent:

• understand the workload;
• select credible peers;
• benchmark each role separately;
• check the fee pool;
• consider shareholder expectations;
• preserve independence; and
• document the rationale clearly.

The goal is not to pay the highest fees. It is not to pay the lowest fees either.

The goal is to reach a fee structure that is competitive enough to attract capable directors, disciplined enough to satisfy shareholders, and clear enough to defend.

A good board fee review should leave everyone with a simple conclusion:

The fees are fair for the role, reasonable for the company, and explainable to shareholders.