What is Director’s Remuneration?

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We all know that being in any kind of business means everything will matter to everybody. Each action that you will take will affect the company one way or another. If you are rank and file, you form the base of the business.

It might seem that higher management does not know or care about your existence. However, you do matter because you are the cogs of the operation. Once the cogs are removed, everything falls off. Your probable aim now is to go higher on the corporate ladder. You may also want to go to another company, but you are going to start from scratch.

On the other hand, it can still be challenging once you have reached the top. For example, you have made it to be a part of the board of directors. Now, these people were usually on the top of the ladder in other companies. They were just hired to fill in the positions.

As they say, they don’t usually come from the bottom of the ladder. Instead, they are hired for their experience in the related field. Also, hiring will depend on the owner or the corporate executives as well as the shareholders. 

Getting To The Directorial Level

If you get into this level though, then you either have enough years of experience, achieved an appropriate educational level or enough training. You would have more responsibilities on your hands, and a lot of things to work for as well.

It will be your duty to make sure that the company’s decisions are going in the right direction. You would be working closely with other directors as well. The management would be listening to you and they will be as well. Lastly, you would be entitled to a director’s remuneration. Think of it as a salary, but it does not work the same way as those in the rank-and-file. 

For directors, it is rather different. Remuneration refers to money that you receive after rendering work or service. This sounds like a normal salary, right? For directors of a company though, this can be a combination of a lot of things.

The company can give you a salary like any other employee. It can be given to you on a monthly basis, although it would be different from other employees. You need to have other responsibilities aside from being a director. For example, you are also involved in human resources or other parts of the business. There would be entitled to an actual salary.

Understanding Your Role As A Stockholder

Meanwhile, you may be able to get more as a stockholder. Most of the time, you would be a part of the board if you have enough assets. This means that you also have a larger voice in making decisions.

If there is any kind of increase or gains on the profits, you would be receiving the greater parts of these as well. This is why you might need to have more investments in other companies as well. It would make sense as a director as well as a stockholder in other companies. As long as it is not related to your current venture, then it would not be seen as a conflict of interest.

Other than this, a director’s remuneration can also include the directorial fees. However, this will depend on company regulations. Most of the time, you are not entitled to receiving this if you are already a part of the company.

Referring to the previous example, you might hold other responsibilities aside from your directorial role. Once you receive payment for this, then you might not be able to receive the aforementioned fees. If there are any expenses that you have procured, then it will be considered as a fee for your services as well.

As a part of the board, you would be facing a lot of challenges. You might be at the top of the company food chain, but you might be an official part of all of it. However, this does not eliminate your importance for management.

As long as you know your responsibilities and you do them properly, then it would be a good thing for you. The management will be looking for you for advice, and you still need them to keep the company afloat. 

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Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.