₹1 lakh per sitting, and in many cases, there is a profit-linked commission paid to non-executive directors, which can be an incentive to attract more skilled and reputed individuals. Compensation can vary from ₹20 lakh to ₹1 crore-plus per director, depending on the size of the company, the industry and profit-linked commissions. A Mumbai-based headhunter specializing in board member searches noted a tripling in compensation over the past two years.
According to primedatabase.com, 1,551 independent directors in 825 companies listed on the National Stock Exchange will complete their tenures in 2024. “Smaller firms which are not in the top 100 listed firms in India want to expand their businesses, attract investments, and they need a board that will improve governance," said the headhunter, who did not want to be named. He noted that firms which were earlier unwilling to pay the capped amount as sitting fees are now willing to stretch their budgets to get niche talent in digital and consumer behaviour, and understanding of generative artificial intelligence.
Compensation is an incentive for senior industry executives who otherwise would prefer to join “brag value boards" or boards of established companies. K. Sudarshan, managing partner at executive search firm EMA Partners, said companies have fees for various committees apart from board sitting fees, and that adds to the overall compensation for independent directors.
“People accepted more board positions during the pandemic since meetings were virtual. But now that firms prefer physical interactions, directors are limiting the number of board positions they could accept ," he said. However, some search firms said companies must raise their compensation package for
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