The study conducted by Frontis Governance provides an in-depth analysis of the remuneration practices of non-executive directors (NEDs) in 160 listed European companies, with the aim of assessing their consistency with recognized principles of good governance: adequacy, proportionality, and safeguarding the independence of the Board.
The analysis reveals a high degree of heterogeneity in remuneration practices, strongly influenced by three main factors: (i) market culture, (ii) ownership structure, and (iii) level of independence.
- Market culture:this is the main driver of remuneration levels.
Differences between countries far exceed those observed between sectors or governance models. Markets such as Switzerland, Spain, and the United Kingdom show generally higher compensation levels, in some cases linked to a more prominent role of the Board; France and Italy, on the other hand, maintain more conservative practices, often based on attendance fees or associated with more concentrated ownership structures. - Ownership structure: this has a decisive impact on remuneration choices.
Compensation tends to be higher and more sophisticated in public companies, due to the central role played by the Board in governance, while it tends to decrease as the influence of major shareholders increases—often due to the presence of shareholder representatives on the Board and a stronger focus on controlling governance costs. - Proportionality and adequacy: these principles are not fully and consistently applied.
The relationship between compensation, company size, and complexity of activities is only partially confirmed. Many companies, especially mid-cap firms, show remuneration levels not strictly aligned with their market capitalization. Consistency with the time commitment required is also limited: the number of meetings is not systematically reflected in directors’ fees. The ratio between remuneration and average employee wages—an indicator of adequacy relative to cost of living—also reveals significant polarizations, only partially attributable to national remuneration systems.
Per gli investitori le retribuzioni dei NED sono un indicatore della qualità della governance. La sfida è bilanciare responsabilità, tempo dedicato e contesto locale per evitare compensi troppo bassi (che scoraggiano i talenti) o troppo alti (che mettono a rischio l’indipendenza).
The path toward a homogeneous European market is still long, but transparency of data is the first step. Full details on market comparisons, remuneration levels, and outliers are available in the complete Frontis Governance 2025 report.