How Much Do Corporate Board Directors Get Paid?
We’re asked this question quite a lot at Women in the Boardroom, and the fact of the matter is, there’s no one answer. Board directors are compensated differently based on the position they hold on the board, what committees they participate in, whether the position is for a publicly-held versus privately-held company, and finally, the size of the organization for which they’ll be serving.
Quite often, like in a typical corporate setting, compensation comes in a package that could include retainers, fees for meeting attendance, a year-end bonus, stock grants, stock options, and other additional benefits. When pursuing board service, it is important to consider what your experience will be as a board member. After all, the time commitment for board service can be considerable.
Though board service can be lucrative, any prospective board member who is deemed to be interested only in the compensation associated with the position will likely not get an invitation to serve. Plus, there are a number of other amazing benefits that come with serving on a corporate board.
Compensation Differs Greatly For Board Service
As I mentioned, compensation for publicly-held and privately-held companies is greatly dependent upon the size of that company and may range anywhere from $75,000 to $500,000 a year. For publicly-held boards, this amount is usually divided between cash and stock or stock options. Compensation for privately-held company boards greatly mirrors that of public boards at larger, well-established companies. Private company boards often set compensation packages based on similarly sized publicly-held companies in their industry.
Typically, directors can generally defer their income, and they are also expected or required to hold stock for the long term. The key difference between publicly-held and privately-held boards is the fact that the stock for a privately-held corporate board is not liquid, although, while a director is serving, that point is usually moot because of numerous restrictions against public company directors selling stock.
There’s More Than Financial Compensation
Additionally, perks can be added such as health insurance, life insurance, or a match for charitable contributions. Keep in mind, that all compensation details are available in the proxy statements and tend to be closely scrutinized by shareholders in this era of activism. And finally, it’s important to remember that offers for compensation for board service are not negotiable.
While serving on a corporate board can make for an incredible second career or serving on multiple boards may entirely replace your current or former executive-level position, the opportunity to serve provides benefits beyond compensation, including the intellectual challenge, an enhanced resume, and service to others.
Your Preparation is Key to Getting on a Board
Before even considering the compensation provided for corporate board service, you have to remember that boards are in search of potential board members with the knowledge and experience to provide effective and valuable governance. It’s important to ensure that you’re qualified for board service and prepared to interview for a board seat. You’ve also got to be plugged into the right network, and make it known that you’re in search of a corporate board position.
When it comes to exploring corporate board service, preparation is key and compensation consideration should be on the periphery. It’s a big commitment and expectations are high.
If you’re interested in continuing the conversation, Reach out to me directly! Leslie Dukker Doty, CEO, Women in the Boardroom.
© 2021, Women in the Boardroom. All rights reserved.