NED Commercial Terms
The commercial structure for a NED appointment with Ambrose and Bell. Set at appointment so the economics support the fiduciary role rather than distorting it.
What the commercial structure is for
The commercial structure of a NED seat shapes the way the seat is held. A NED who is paid largely in equity will think differently from a NED who is paid in cash. A NED whose fee scales with deal completion will think differently from one whose fee is steady. The structure below is built so the economics back the fiduciary duty rather than pulling against it. Predictable, transparent, and free of incentives that compromise independence.
The commercial terms work alongside the seven engagement criteria and the engagement process. All three documents form the contract package at appointment.
Fee structure
A fixed annual fee, paid monthly in arrears. The fee is set at appointment based on the size and complexity of the company, the number of scheduled board meetings, the committee load, and the geography. The fee is reviewed annually with the chair as part of the structured 12-month review, not adjusted ad hoc.
Mid-market UK companies between £20m and £250m of revenue typically sit in a defined fee band that reflects market practice for an experienced NED with statutory directorship history. Smaller or larger companies sit at the edges of that band. We share the band openly in the first conversation rather than negotiating against unknowns.
The fee is fixed in cash. There is no bonus on EBITDA, no kicker on a deal completion, no payment tied to a transformation milestone. A NED whose pay scales with a transaction is not in the same fiduciary position as one whose pay is steady. Where the business genuinely benefits from a NED with a stake, the right structure is a separately negotiated, disclosed, and modest equity holding under the UK Corporate Governance Code's independence test, not a performance-linked fee.
We do not accept material equity in lieu of fees. We can accept disclosed minor equity at appointment where the company has a clear case for it and the holding is below the independence threshold under the Code. The default is fees in cash.
Notice and term
The default term is 12 months from the appointment date, renewable annually by mutual agreement after the structured review.
Either the company or the NED can give three months' written notice of departure at any point. The 12-month letter does not lock either side into a longer commitment than that.
The default total tenure is three years. A second three-year term is possible subject to the independence position. We do not stay beyond six years without an explicit board reset on the independence question, in line with the UK Corporate Governance Code.
D&O insurance
£2m per claim is the floor. Side A, B and C cover. Larger or more complex companies require higher limits.
Six-year run-off cover from the date of departure. The run-off protects the NED against claims that emerge after the seat has ended.
The premium is paid by the company. The cover sits within the engagement criteria as condition 4 and is not negotiable below the £2m floor. The D&O policy and the run-off endorsement are sighted before the letter of appointment is signed, not after.
Expenses
Reimbursement. Travel, accommodation, and reasonable out-of-pocket expenses incurred for board, committee, and ad-hoc meetings are reimbursed at cost against receipts.
Travel class. Standard class on UK rail. Economy on European flights up to four hours. Premium economy or business on flights over four hours where the meeting requires it. We do not charge first class as standard.
Subsistence. Reasonable subsistence at cost. We do not charge a per-diem. We do not charge for time spent in transit at the standard NED day-rate.
Cap. Annual expenses cap agreed at appointment for predictability. Above the cap, expenses are agreed in advance with the chair.
Exit and clean departure
Notice period. Three months' written notice either side, served on the chair (or to the company secretary where the chair is the departing NED).
Orderly handover. Final 30 days used for handover. Files, board papers, and ongoing matters are passed to the successor NED or the chair. Outstanding committee matters are closed or formally handed over with written notes.
Run-off engagement. Six-year D&O run-off cover is confirmed in writing on the date of departure.
Post-exit consulting. Ambrose and Bell does not take post-exit consulting engagements with the same company for 12 months by default. The bar is set so the NED is not perceived to have used the seat to tee up a paid role afterwards. The 12-month bar can be waived by the board on disclosed and documented grounds, but the default sits the other way.
Public statements. Departure is announced through the company's normal channels. We do not make freelance public comment about the company or the board after departure.
Total cost of a NED seat
A typical mid-market UK NED appointment, on the structure above, costs the company the annual fee, the D&O premium loading, and the agreed expense cap. The full cost is laid out in the letter of appointment so the company has a single number to plan against and the NED has a single number to compare against the value of the seat.
More on the NED engagement
Engagement criteria
The seven practical conditions for accepting a NED seat. UK Companies Act 2006 ss.170 to 177.
View criteria →Process
How an appointment is set up: due diligence, written conditions, induction, first-90-days agenda, ongoing rhythm.
View process →NED overview
Back to the NED engagement page.
View overview →Frequently asked questions
Talk to us about a NED appointment
A short conversation tells both of us whether the conditions can be met.