Fees:
Normally they get paid an annual fee and expenses where appropriate. Depending on their time commitment, the fees can vary widely from €10,000 to €100,000+ in some publicly-quoted companies. For SMEs, we are seeing fees of between €10,000 and €25,000.
Equity Participation:
Some companies cannot afford to pay fees to Non-Executive Directors. In many instances, agreement can be reached in lieu of equity participation. Good practice would be to award shares to a level that they are NOT of material value to the Non-Executive Directors. It is felt that if the shareholding is material to them, it could cloud their judgment on certain issues which may be of material benefit to them and thus, compromise their independence.
Share Options:
The same criteria prohibit the grant of share options to Non-Executive Directors. The essential difference is that share options are usually conditional on some future event e.g. future profits at a certain level and this might cause the Non-Executive Director a conflict of interest between objectivity and the triggering of a share option.
Non-Executive Directors (Investors):
Some Non-Executive Directors are keen to invest in high potential businesses.
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