Serving connected a firm committee of directors tin beryllium a lucrative broadside gig oregon 2nd vocation for high-profile executives and caller retirees. Board rank is little stressful and time-consuming than earlier positions committee members person taken on, portion inactive offering an awesome income.
The median compensation for members of backstage institution boards of directors was $42,750 successful 2020, according to a planetary survey by Lodestone Global. That's really a 2% diminution from the twelvemonth before.
It goes a batch higher from there. Compensation for committee members tin easy scope $300,000 to $500,000 a year, according to Veritas, an enforcement compensation consulting service.
Not surprisingly, the astir lucrative seats spell to directors astatine S&P 500 companies. Average compensation successful 2018 astatine those firms was $304,856, according to Reuters. That's a 43% summation implicit 10 years. That year's apical payer was Goldman Sachs Group Inc., which paid its directors an mean of $599,279.
Board members successful general, by the way, participated successful an mean of 7.9 meetings, successful idiosyncratic oregon remotely, during the year.
If you’re funny successful pursuing a committee seat, here’s what you request to cognize astir what boards are looking for, however to get noticed, and what to expect arsenic compensation.
- Corporate boards are made up of highly palmy enforcement outsiders.
- They scope from caller retirees and radical nearing status to younger radical who've experienced aboriginal successes successful business.
- By learning astir the backgrounds of existing committee members, you tin extrapolate what they whitethorn beryllium looking for successful caller ones.
What Companies Seek successful a Board Member
You tin sometimes larn what companies question successful their committee members by speechmaking the company’s yearly proxy statement. For example, immoderate of the qualities Wal-Mart says it’s looking for successful committee members include: "outstanding accomplishment successful their nonrecreational careers; wide acquisition and wisdom; idiosyncratic and nonrecreational integrity; quality to marque independent, analytical inquiries; acquisition with and knowing of the concern environment; willingness and quality to give capable clip to Board duties."
The proxy connection besides says the institution is seeking “expertise successful governance, strategy, development, and execution”; radical who recognize “financial, operational and strategical issues facing ample retail companies”; planetary oregon planetary concern experience; exertion and e-commerce experience; marketing, brand management oregon public relations experience; finance, accounting, oregon fiscal reporting experience; oregon regulatory oregon ineligible experience.
Diverse Candidates Sought
The much qualifications you tin bring to the table, the better. In caller years, companies person besides begun to question taste and sex diverseness connected their boards.
These descriptions are reasonably generic. By learning astir the backgrounds of existing committee members, you tin extrapolate what the institution is astir apt looking for successful caller ones.
Attractive qualities see acquisition successful high-level enactment for the national government, positions arsenic a CEO oregon director, acquisition founding and moving a palmy startup, and acquisition connected different boards.
Look for a spread successful expertise that mightiness beryllium near erstwhile a existent committee subordinate steps down. Could you capable that gap?
Youth Is Not a Barrier
Boards aren't wholly made up of retirees and radical nearing the extremity of their careers. You volition vie for committee positions with radical who person been highly palmy astatine a young age.
Walmart's existent committee members see Cesar Conde, 47, seat of NBCUniversal, and Marissa Mayer, 46, who is well-known for the precocious positions she achieved astatine Google and Yahoo.
How to Get Noticed
Your strategy to get noticed and beryllium considered for committee rank should beryllium akin to the strategy it takes to unafraid immoderate high-level position.
“Make definite you make a committee resume that positions you arsenic qualified for the corporation’s board,” says Renée Hornbaker, who presently serves connected the boards of Eastman Chemical Company, The Freeman Company, and Tri Global Energy. “Make definite your resume states what you volition specifically bring to the array arsenic a committee member.”
Search Firms Can Help
Executive hunt firms tin streamline the process since they’ll cognize astir disposable positions. Hornbaker suggests giving your resume to hunt firms you’ve dealt with successful the past and letting them cognize you're funny successful obtaining a committee position.
“Finally, marque definite you are networking and letting radical cognize what boards you are suitable for, portion besides leveraging contacts you mightiness person with the companies that you mightiness beryllium funny in,” Hornbaker says.
Networking Is Key
You'll privation to prosecute networking some online and offline. For online networking, Mark Rogers, CEO of BoardProspects.com, recommends his site, a board-recruitment web akin to LinkedIn. Its members see existent committee members, aspiring committee members, and corporations looking to prosecute committee members. Complement your online networking with face-to-face connections astatine events, conferences, and societal gatherings, helium says. Opening up lines of connection to a second- oregon adjacent third-degree transportation could pb to an fantabulous acceptable for the committee presumption you seek.
Hornbaker besides recommends becoming educated connected the fundamentals of governance and directorship done a programme specified arsenic the National Association of Corporate Directors Director Professionalism® program.
Only outside directors get compensation specifically for serving connected the board. Inside directors, who are mostly C-suite level executives, don't person further compensation.
Hornbaker says wage depends connected the complexity of the company, whether it's nationalist oregon private, the fig of meetings it entails, and the magnitude of work involved.
As a committee member, your responsibilities would typically see preparing for and attending committee meetings, and reviewing institution filings and materials, she says, arsenic good arsenic advising absorption connected a wide scope of matters, including succession, strategy, compensation, and acquisitions.
Rogers adds, “Board members are the representatives of the shareholders, and it is their fiduciary work to oversee the affairs of the corporation, including wide show and fiscal strength, and to service arsenic a advisor for absorption – peculiarly with respect to the strategical and operational directives of the company.”
Formal committee meetings wherever each the directors are contiguous typically hap 4 to six times per year, depending connected the company.
“Obviously, if determination is simply a situation oregon a strategical contented – for example, an acquisition – the fig of hours for a manager tin dramatically increase,” Rogers says.
Hornbaker says attending committee meetings mightiness beryllium different responsibility. “For example, audit committees person regular meetings earlier nationalist filings,” she says. “Another illustration would beryllium compensation meetings to sermon compensation plans and awards.”
Examples of Top-Paying Boards
Here are a mates of examples of what Fortune 500 companies wage their committee members.
According to the company's 2020 proxy statement, Walmart’s compensation programme for extracurricular directors offers basal compensation of a $175,000 yearly banal assistance and a $100,000 yearly retainer.
Outside directors who clasp definite committee positions person an further yearly retainer: $35,000 for the pb autarkic director; $25,000 for audit committee members and for compensation, nominating, and governance committee members; and $20,000 for strategical readying and concern committee chairs and for exertion and eCommerce committee chairs.
Apple’s non-employee directors each person astir $250,000 worthy of restricted banal units per year, which are granted astatine the yearly shareholder gathering and vest connected Feb. 1 of the pursuing year.
Non-employee directors besides person an yearly currency retainer of $100,000. The committee seat receives an further $200,000; the audit committee seat receives an further $35,000; the compensation committee seat receives an further $30,000, and the nominating committee seat receives an further $25,000.
Non-employee directors besides get each caller Apple merchandise for escaped connected petition and tin acquisition much astatine a discount.
To find retired what immoderate publically held institution pays its committee members, work the company’s yearly proxy statement, disposable from its firm website oregon the Securities and Exchange Commission website.
The Bottom Line
As an extracurricular director, you could bring a caller position to a firm committee and leverage your years of acquisition arsenic an enforcement into a satisfying caller task that inactive leaves you with capable clip to bash your time occupation oregon bask your retirement. The Boston Globe reports that the mean clip committedness to service connected a committee is less than 5 hours per week.
Aside from the fiscal compensation, your reward volition beryllium having important input into large decisions made by the company, specified arsenic enforcement hires, policies connected dividends and banal options, and enforcement pay – each portion representing the champion interests of absorption and shareholders.