This study examines the determinants of independent director compensation in China, with particular interest in the impacts of state ownership and legal institution. Controlling for the characteristics of directors, boards, and firms, we find independent director compensation is positively related to attributes of director's human and social capital such as education, effort, professional expertise, and connection (guanxi). We show that independent director pay is determined differently across the ownership structures. Independent directors are paid less in companies owned by local government units and the independent directors in such companies are paid less in a region with more developed legal institution. This study contributes to the limited literature on independent director compensation by extending beyond the market economies to explore the determinants of independent director compensation in a transitional economy like China. It also adds to the literature on legal institutions by examining the impacts of legal development on compensation. Finally, this study informs the public of the current compensation practice, which will facilitate future policy making.