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Independent directors of mutual funds are compensated for their time and service by the funds they oversee. The adviser typically pays the compensation of interested directors who also are officers or employees of the adviser. Compensation varies within the industry and may depend on a number of factors. The following factors may play a role in determining compensation:

  • complexity and size of funds and fund groups overseen by a director,
  • time commitment required for meetings and other duties,
  • number of meetings, and
  • compensation levels necessary to attract highly qualified people.

Director compensation may be structured in different ways and can include an annual retainer, board and committee meeting attendance fees, a deferred compensation plan, a retirement program, or other benefits. Independent chairs, lead independent directors, and committee chairs may receive additional compensation for their added responsibilities. Unlike corporate directors, fund independent directors do not receive shares or options in the fund (although many directors do invest in some of the funds they oversee).