How Much Do Board Members Make?

Being a corporate board member can be a lucrative second career or side gig for recent retirees or high-profile executives. Board membership is less time-consuming and stressful than other positions they may have held, while they still receive an impressive income.

A global study by Lodestone Global reports that in 2020, the median compensation for board members of private companies was $42,750. That was a 2% decrease from the year before. The average pay for board members gets a lot higher from there. Veritas also reports that the compensation for board members can easily range between $300,000 and $500,000 a year. 

The most lucrative compensation goes to board members at S&P 500 companies. In 2018, the average pay at those companies was $304,856. In that year, the top payer was Goldman Sachs Group Inc., which paid its board of directors an average of $599,279.There has been a 43% increase in the last ten years. 

If you are looking to pursue a board member seat, here is what you need to know about what to expect as compensation and the role of a board member. 

If you’re curious to learn what CEOs do all day, click here to learn more. If you’re interested in finding a business mentor, you can read more about the process in the linked post.

How Are Board Members Paid?

Board directors aren’t paid on an hourly basis. Instead, they receive a base retainer each month. Besides that, they also receive a fee for each annual meeting and another fee for every meeting they attend via teleconference. 

At any organization, the compensation for board members may be set up differently. For example, some organizations pay a higher base retainer and may not pay extra for annual meetings. Some companies also pay partly in stock options instead of cash. 

As expected, more prominent companies pay significantly more than the average. In 2015, the median pay for board members at the biggest U.S. companies was above $250,000. 

The Size Of The Organization Matters

The size of an organization makes all the difference in how much board members get paid. Small organizations often offer stock options that pay off if they hit it big. At the $10 million to $100 million tier, financial compensation becomes more common. 

Board director compensation also depends on the nature of the industry, the number of annual meetings, and the structure of the company. Whether stocks are publicly traded or privately held also makes a difference; public companies have more regulations and oversights to handle. That places more pressure on the board members, so their compensation should be correspondingly higher. In addition, board members’ legal liability is often greater because companies are less inclined to insure them against any lawsuits.

Nonprofit board members are generally unpaid volunteers. However, the company typically covers their costs. Therefore, being a board member of a nonprofit company won't earn an income, but won't cause them to lose money either.

What Are The Responsibilities Of Board Members?

Only outside board members get explicitly paid for serving on the board. Inside board members, typically C-suite level executives, don’t receive additional payment.

Again, the compensation of board directors depends on the structure of an organization, whether it’s private or public, the number of annual meetings, and the responsibility involved. 

The responsibilities of board members include preparing for and attending board meetings and reviewing company materials and filings. The duties of a board member entail advising company management on various matters, such as strategy, succession, acquisitions, and compensation.

Further, board members are the representatives of shareholders, and it’s their mandate to oversee the company affairs, such as financial strength and overall performance, and act as consultants for management--especially regarding the operational and strategic directives of the company. 

Formal board meetings where all board directors must be present usually take place three to six times per year, depending on the company’s size.

However, if there’s a crisis or a strategic problem, for instance, an acquisition issue-- then the number of working hours for a board member can increase significantly, and so does their compensation. 

Another responsibility for board members is attending committee meetings; for instance, audit committees must have regular annual meetings before public filings. Board directors may also have to attend compensation meetings to discuss compensation awards and plans for the company.

Beyond board members and CEO’s there are other key figures that keep a company running, to learn what a chief of staff does, click this link.

Final Thoughts

The pay for board members varies from company to company. The variation depends on the company’s size, the number of annual board meetings, and whether the organization is publicly owned or privately held. The compensation also varies with time: companies continue increasing board members’ pay, year after year, faster than they do for their typical employees.