Mutual Fund Director Compensation in 2015 - May 2016 Print E-mail
Written by Jay Keeshan   
Management Practice Inc. (MPI) has just completed its 23rd annual “Survey of Mutual Fund Director/Trustee Compensation and Governance Practices,” with data covering 1,902 directors from 403 fund boards. Full reports and specific board compensation comparisons are available from MPI.

Mutual Fund Director Compensation in 2015

By Jay Keeshan and C. Meyrick Payne of Management Practice Inc. 



Management Practice Inc. (MPI) has just completed its 23rd annual “Survey of Mutual Fund Director/Trustee Compensation and Governance Practices,” with data covering 1,902 directors from 403 fund boards. Full reports and specific board compensation comparisons are available from MPI.


The average pay increase from 2014 to 2015 (for equivalent directors) was 5.9%, down from   7.5% the previous year and 7.2% the year before.  Three years of increases above 5% comes after several years of increases closer to 3% in the years following the financial crisis.  Assets under management have flattened out at around $16 trillion, which may be slowing the pace of pay growth. 


Notable again this year were the differences in increases depending on the level of assets.  Whereas higher increases are typical for boards overseeing larger and more complicated fund groups, 2015 saw larger boards increasing pay at an average pace, while medium-sized boards—those overseeing $10 billion to $50 billion in assets—took increases in the 15% - 20% range.  Many of these medium-sized boards face challenges that are similar to those overseeing larger fund groups, compelling them to increase pay to be able to attract qualified board candidates. 


Pay for the smallest boards—those overseeing less than $3 billion—was flat and some categories even saw decreases.  The smaller board categories are the most variable and consist, in part, of new fund groups, as well as groups that often either close or merge with other groups.


Setting director compensation has become more difficult in recent years, particularly for some boards, as the use of AUM as a metric becomes less relevant in the face of a rapidly evolving industry.  Factors such as expanding distribution channels, use of sub-advisors, and complexity of products and investment types have a greater impact on directors’ responsibilities, and are being taken into consideration more often when selecting comparable peers. 


Using AUM as the sole metric can be problematic, as is displayed in the table below. This displays the pay range for fund boards with between $3 billion and $10 billion in AUM for 2013, 2014, and 2015:


Range of Trustee Compensation for Boards Overseeing

$3 billion to $10 billion in AUM (in Percentile)




50th (median)























The wide range of pay from the 10th to the 90th percentile in this relatively small grouping demonstrates that it can be difficult to properly set pay using just one or even two metrics.

The survey found that approximately 85% of all fund directors are classified as independent, with 67% of boards headed by an independent chairman and an additional 22% headed by a lead independent director.  The vast majority of these chairmen (along with many lead independent directors) receive additional fees of anywhere from $10,000 to $200,000 or higher, with a reported average of approximately $37,200. 


Boards continue to adjust their committee structures as the industry and their fund complex evolves.  More boards now report having a specific set of criteria for recruiting new directors, and committee chairs are often hired specifically for their particular background.  They are also receiving a fee more often and at increasing levels.  While the range of these fees varies widely depending on the particular duties, they typically are in the $10,000 to $30,000 range. 


Two-thirds (68%) of US fund boards are paid with a combination of retainer and meeting fees.  While a level of total annual compensation is typically set as a target, this structure allows some flexibility during extenuating circumstances.  The majority of the rest (28%) are paid by retainer only, with relatively few boards paying meeting fees only. 


The relative cost of fund governance remains a mere fraction of the total costs of running a fund.  Total U.S. fund board compensation per $1 million in AUM amounted to just $17.32; a fraction compared to the $10,000 in management fees and other expenses a typical mutual fund might incur (assuming a 1% expense ratio).  Independent directors provide a highly efficient system of oversight that is paid not by U.S. taxpayers, but rather by those who directly benefit from its protection.


Trustees cost less based on the asset levels overseen.  For example, compensation per $1 million in AUM ranged from a median of $20 for groups with $1 billion or less in assets to $1.69 for groups with more than $96 billion in assets.


The study found that approximately 20% of all standing and 33% of new fund directors in 2015 were female, and 39% are retired from their primary profession.  


Retirement ages continue to trend upward.  73% of participating boards have a mandatory retirement policy, with 75 now being the most commonly reported retirement age (37%) after remaining at 72 for many years.  17% have retirement ages above 75.  This is reflected in the median and average director age, which was 67, up from 66 and 65 respectively.  “Director Emeritus” plans also continue to draw interest but do not appear to be widely used.





Management Practice Inc. is a specialized consulting firm based in Stamford, Connecticut, and provides governance, economic, and business advice to mutual fund boards. More information regarding this report is available at or from C. Meyrick Payne or Jay Keeshan at (203) 973-0535 or email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .



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