Director Fee Agreement Template for England and Wales

A Director Fee Agreement is a legally binding contract that establishes the compensation framework between a company and its directors in England and Wales. This document serves as the foundation for transparent director remuneration arrangements while ensuring compliance with statutory requirements under the Companies Act 2006 and corporate governance standards.

When do you need this document?

You need a Director Fee Agreement when appointing new directors to your company board, whether they are executive or non-executive directors. This document is essential when restructuring existing director compensation packages or when your company transitions from private to public status, requiring enhanced transparency measures. Listed companies particularly require formal fee agreements to comply with Corporate Governance Code requirements and shareholder disclosure obligations. The agreement becomes crucial during board changes, annual remuneration reviews, or when implementing new benefit structures for directors.

Key legal considerations

The agreement must clearly define the fee structure, including basic director fees, committee participation fees, and any performance-related compensation components. Payment terms should specify frequency, method, and currency of payments while addressing expense reimbursement policies and benefit entitlements. Termination clauses must outline conditions for ending the arrangement, including notice periods and final payment calculations. The document should address confidentiality obligations, conflicts of interest procedures, and compliance with fiduciary duties. Consider including provisions for fee adjustments, review mechanisms, and procedures for handling disputes or changes in director responsibilities.

Legal requirements in England and Wales

Under the Companies Act 2006, director remuneration must comply with specific disclosure requirements, particularly for publicly listed companies who must publish detailed remuneration reports. The agreement must align with shareholder approval requirements for directors' service contracts and compensation arrangements exceeding statutory thresholds. Income Tax Act 2007 provisions apply to director fee taxation, requiring proper PAYE arrangements and National Insurance contribution calculations. The Equality Act 2010 mandates non-discriminatory compensation practices, ensuring equal treatment regardless of protected characteristics. Large and medium-sized companies must comply with detailed reporting regulations under the Companies and Groups Regulations 2008, requiring specific disclosures about director compensation in annual accounts and remuneration reports.