Profit Surge and Regulatory Mandate Drive Increase in Fees for Independent Directors
India’s top companies have significantly increased the fees paid to independent directors over the past five years, driven by a strong profit growth and a push for better governance aimed at attracting global talent. According to a recent report by Deloitte India, the average compensation for independent directors at Nifty 50 companies nearly doubled, rising from ₹1.52 crore in fiscal year 2020 (FY20) to ₹3 crore by FY25. This study, titled the Nifty 50 Independent Director Remuneration Study – 2025 Edition, specifically excludes banks and insurance firms, which follow separate compensation guidelines.
Dinkar Pawan, director of Deloitte India, attributes this increase primarily to the robust profit growth of Nifty 50 companies during this five-year period, which has in turn led to higher commission payouts. Additionally, independent directors have benefitted from increased sitting fees and a greater number of meetings, further boosting their earnings. These directors now constitute a significant portion of company boards, representing nearly 40% to over 50% in the last fiscal year.
In comparison, average compensation for chief executive officers (CEOs) in the same companies rose by about 50%. However, it’s essential to note that this comparison isn’t strictly like-for-like, as CEOs earn significantly more and follow a different remuneration structure. The trend of rising director pay stands out against the backdrop of fluctuating compensation policies across India Inc. After the pandemic, many companies offered high pay to fuel digital expansion, but as global uncertainty increased, hiring and pay hikes began to slow.
Shriram Subramanian, founder of Bengaluru-based corporate governance firm InGovern Research Services, highlights that investors are carefully monitoring whether director performance and time commitment have increased in line with the rise in their compensation. “The responsibilities of committee members have increased,” he remarked.
Regulations mandate that all listed companies must have at least one-third of their board members be independent directors, a requirement that has spurred demand for qualified individuals in these roles. Executive search firms confirm this growing demand. Puneet Kalra, managing director at Russell Reynolds Associates, noted that the demand for independent directors has doubled in the past two to three years, primarily driven by the need to address governance issues and the expansion of family businesses seeking bridges between family members and operating management.
Kalra further stated that when a company seeks an independent director who also sits on global boards, they often have little choice but to meet near the remuneration standards in the US, which typically average around $250,000. Additionally, Korn Ferry India’s chairman and managing director, Navnit Singh, indicated that companies are now allowing their CXOs to take board positions in non-competitive firms.
Among independent directors, female representation has seen a notable increase in pay, with their compensation at Nifty 50 companies in FY25 approximately 2.1 times their FY20 levels. In comparison, their male counterparts experienced a 1.9 times increase during the same period.
