This question is quite common, but there is no one-size-fits-all answer. The amount of compensation for board members depends on many factors, their role on the board, the size and type of the company, its success in the market, and their participation in committees. Most often, compensation for corporate directors comes in the form of a package that includes advances, bonuses, stock grants, and other benefits. Your work experience is also taken into consideration when evaluating your compensation. Below we’ll look at the nuances of these rewards in more detail.
Board compensation varies greatly
As mentioned, one of the main reasons why each board’s compensation varies significantly is the type of company it operates in. Public or private, depending on that, payment can range from $75,000 to $500,000 a year. On public boards, directors receive this compensation, either in cash or in the form of stock or stock options. However, if the public company is large and successful enough, its reward is not that different from private organizations. Moreover, private companies often set their compensation packages on the example of large public companies in their industry.
The main difference between these types of companies is that the stock directors of private companies receive cannot be quickly exchanged for money, meaning it is not liquid, at least not while the director is in office.
A corporate director’s income is more than just compensation
Additional benefits such as health insurance, life insurance, or participation in charitable contributions can be added to your income. You can carefully review all the details about compensation in proxy statements, and the most important thing to remember is that your compensation offer is not subject to stipulation.
Serving on corporate boards does make a decent profit, but if a potential board member wants the position solely because of the compensation, they probably won’t get it. It is important to remember the other benefits of this job, aside from the monetary issue. Due to the constant intellectual challenges, a board position allows you to build a great career and gain impressive experience, a resume, and mental stimulation.
Company size matters
Board members in small businesses are more likely to be offered stock options that will pay off if the company is successful in the marketplace. Another thing that affects compensation is the number of annual meetings, the industry, and the business structure. Nevertheless, the corporate mindset implies that the payment of participants should be decent because there is a lot of pressure and legal responsibility. At the same time, the directors of non-profit organizations are volunteers and should not make any profit from their activities. However, the company still covers all their expenses; thus, the directors get nothing but nothing to lose.
It’s your training that counts
So, compensation also depends on the experience and level of expertise of the board member. The board appreciates knowledgeable participants in the narrow specialties required for their business. Before submitting your board application, you should ensure you meet a director’s parameters and are ready for an interview. The most important thing to remember is that remuneration should not be a priority for you. The purpose of a board member is to protect the company’s and its shareholders’ interests and do everything for its benefit. Therefore, personal goods should not be involved in your activities.