Independent directors’ pay in Nifty 50 firms doubles to Rs 87.4 lakh in 5 years

Bengaluru: Median compensation of independent directors at India’s top blue-chip companies has more than doubled in five years, reflecting their increased responsibility, time commitment and effort.

The median compensation for independent directors at Nifty-50 companies shot up 106% to Rs 87.4 lakh in FY24 from Rs 42.3 lakh in FY19, with a 25% pay jump in the last fiscal alone, showed an analysis of these companies shared with ET by specialised executive compensation advisory firm Exec-Rem Advisors.

Experts said the pay is being driven up by companies wanting to ensure they get adequate time and attention from independent directors as their roles become increasingly complex and demanding, requiring them to navigate unforeseen challenges and crises, provide oversight on critical issues, deal with stricter regulatory requirements, ensure continuity, and influence inclusivity and innovation.


“The role of an independent director has become very demanding, requiring a significant time commitment for board meetings, committee work, and staying informed on industry trends and company-specific issues,” said Anubhav Gupta, managing director of Exec-Rem Advisors.

The business environment is becoming increasingly complex with new uncertainties adding to volatility, he said. “Directors must be compensated well for their time and value they bring to the table,” he added.

The median compensation for independent directors at 37 of the Nifty-50 companies – excluding public sector undertakings as well as banking and insurance companies whose non-executive director pay is regulated by the RBI and IRDAI, respectively – grew at a compound annual growth rate (CAGR) of approximately 16% between GY19 and FY24, Exec-Rem’s study showed.

Independent directors in the 75th percentile of these companies earned an average of Rs 1.11 crore in FY24, up 54% from Rs 71.98 lakh in FY19. At the lower end, companies in the 25th percentile paid independent directors an average of Rs 48.8 lakh, up 162% from Rs 18.6 lakh in FY19, it showed.

“If a director is compensated well for the time and value add, it becomes less likely that he/she takes multiple directorships in different companies,” Gupta said.

Median commission paid to an independent director in a Nifty-50 company increased from Rs 33.6 lakh in FY19 to Rs 74.10 lakh in FY24, a CAGR of approx. 17%. Last year alone, it jumped 34%, from Rs 55.2 lakh in FY23.

The sitting fee per meeting is capped at Rs 1 lakh and equity compensation is prohibited for independent directors in India. Therefore, if a significant enhancement in compensation is desired, increasing the commission remains the sole viable option, Gupta said.

Median sitting fees paid to an independent director in a Nifty- 50 company for attending board and committee meetings increased at a CAGR of 11% from FY19 to FY24.

Amit Tandon, managing director of proxy-advisory firm Institutional Investor Advisory Service India (IIAS), said roles and expectations from independent directors have steadily gone up. The responsibilities thrust upon them by regulators are also much more, he said. Investors, too, are more demanding and critical of directors.

“Cybersecurity, ESG, digitisation strategy, etc. are all part of the increased remit. Board meetings take more time, there’s more stuff to read, more information to digest. Given all this, pay will only increase,” Tandon said.