Non-Executive Director Fees: Comparing Retainer Structures in SA Corporations

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Boards and remuneration committees are rethinking how they pay non-executive directors (NEDs). In South Africa, the dominant model is still a fixed retainer, but variations — attendance fees, committee retainers, and blended models — have become more common as governance expectations and meeting cadences change. (spencerstuart.com)

Why retainer structure matters for companies and directors

How fees are structured affects:

  • Attraction and retention of high-calibre independent directors.
  • Perceived independence, since incentive-style pay for NEDs is widely discouraged.
  • Board behaviour (e.g., willingness to attend additional meetings, take on committee work).
    Companies therefore aim to balance market competitiveness with governance best practice and shareholder expectations. Recent market surveys make these trade-offs explicit for JSE-listed boards. (spencerstuart.com)

Common retainer structures in South Africa

Below are the typical retainer approaches you’ll see in SA annual reports and AGM notices.

  • Fixed annual retainer (chair and members) — paid monthly or quarterly.
  • Retainer + meeting/attendance fees — often a percentage split between retainer and per-meeting fees (common splits include 60% retainer / 40% attendance).
  • Committee retainers or specialised chair retainers (audit, risk, remuneration).
  • Per-meeting / ad-hoc only (rare for chairs; more common in smaller private companies). Merafe’s integrated report and many listed-company policies describe the retainer/attendance split and the committee-specific retainers used in practice. (meraferesources.co.za)

Typical market signals (what surveys show)

  • Retainers are the dominant approach for chairs and NEDs; attendance fees are less common for chairs. (spencerstuart.com)
  • The average NED retainer reported for the JSE Top 50 is in the hundreds of thousands of rand, with wide variation by company size and currency practices. (spencerstuart.com)
  • Big consultancies (PwC, Spencer Stuart) report upward pressure on NED fees driven by complexity, regulatory change, and time commitments. (pwc.co.za)

Comparison table: retainer structures, pros/cons and typical ranges

Structure Typical split / format Pros Cons Typical ZAR signals
Fixed annual retainer 100% retainer (paid monthly/quarterly) Predictable for company and director; signals commitment May under-reward extra ad-hoc work Median NED retainers for ZAR‑paid roles often in the R400k–R700k range (varies by cap). (spencerstuart.com)
Retainer + attendance fees e.g., 60% retainer / 40% meeting fees Aligns pay to time; compensates heavy meeting schedules More admin; potential to incentivise meeting attendance over quality Attendance fees used by ~26% of boards in Spencer Stuart sample; avg. attendance fee observed. (spencerstuart.com)
Committee retainers (separate chairs/members) Additional flat committee retainers Recognises special responsibilities (audit chair, etc.) Complexity in disclosure and benchmarking Audit committee chairs often receive materially higher committee retainers. (spencerstuart.com)
Per-meeting / ad-hoc only Pay per meeting or engagement Cost-flexible for low-frequency boards Harder to attract high-quality NEDs for complex businesses More common in SMEs and private companies; rare for JSE chairs. (meraferesources.co.za)

Practical drivers that determine fee levels

Companies and RemCos typically benchmark fees using these factors:

  • Company size (market cap, revenue) and sector (financial services vs. consumer). (spencerstuart.com)
  • Meeting frequency and expected out-of-meeting work (strategy sessions, investor engagements). (meraferesources.co.za)
  • Committee load — audit and risk committee chairs carry premium responsibilities. (spencerstuart.com)
  • Currency exposure (dual listings often pay in foreign currency and skew averages). (spencerstuart.com)

Governance, disclosure and best practice

King IV and JSE disclosure expectations emphasise transparency about how NED fees are set and approved by shareholders. Boards should document benchmarking sources, the rationale for any attendance/committee fees, and the approach to independence (NEDs typically don’t receive performance-related equity). Accountable disclosure helps maintain shareholder support for fee increases. (accountancysa.org.za)

Tax and cross-border payment considerations (what NEDs and companies must watch)

Tax treatment and exchange-control rules can materially affect net outcomes for directors:

  • Resident NED fees are treated differently from employment income; SARS guidance clarifies withholding and reporting obligations for various officeholders. Companies and NEDs should confirm PAYE and reporting rules with SARS guidance. (sars.gov.za)
  • Exchange-control and remittance rules for payments to non-resident directors were tightened in recent SARB circulars and allied guidance, meaning remittances may require SARS compliance checks and supporting documentation before funds can be released offshore. This can delay payment to non-resident NEDs. Professional advisers and treasury teams must plan for AIT/TCS or Manual Letter of Compliance where required. (deloitte.com)

For practical reading: see Deloitte’s summary of exchange-control changes and the SARS Guide for Employers to confirm current withholding/employee tax positions. (See Deloitte and SARS links in-line below.) (deloitte.com)

How RemCo should choose a structure (recommended checklist)

When deciding between retainer models, RemCos should:

  • Benchmark against comparable JSE peers and independent surveys. (spencerstuart.com)
  • Estimate annual time commitment and assign values to committee chairs and substantial ad-hoc work. (meraferesources.co.za)
  • Prioritise transparency in AGM disclosures and obtain a shareholder-approved special resolution for director fees where required by the Companies Act. (sec.gov)
  • Factor tax and remittance implications for non-resident directors into net pay calculations. (deloitte.com)

Negotiation pointers for prospective NEDs

  • Ask for a clear breakdown: base retainer, committee retainers, attendance fees, and reimbursable expenses. (meraferesources.co.za)
  • Confirm the expected time commitment and whether ad-hoc work is covered beyond base fees. (spencerstuart.com)
  • Clarify tax and remittance handling if you are non-resident — payment timing can be affected by SARB/SARS checks. (deloitte.com)

Quick-reference external resources

Conclusion — fit structure to company complexity and stakeholder expectations

There’s no one-size-fits-all. For large JSE-listed companies, fixed retainers with committee supplements remain the norm; for smaller or time-flexible boards, blended or meeting-based approaches can work. Boards must document rationale, benchmark responsibly, and be mindful of tax and exchange-control impacts — especially where non-resident directors are involved. Use independent surveys and the company’s governance code (King IV/JSE guidance) as guardrails when designing or changing fee structures. (spencerstuart.com)

Further reading on executive and C-suite remuneration trends in related topics:

If you want, I can:

  • produce a sample fee schedule tailored to a specific market-cap band (small/medium/large), or
  • draft AGM wording for a proposed NED fee increase and disclosure text consistent with King IV and Companies Act requirements.

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