Most directors would agree that serving on a board is a very rewarding experience. Benefits may include personal, financial, or professional advantages. However, because the average board seat requires approximately 200 hours of work per year, it must be carefully weighed against the extra responsibility you will have to take on in addition to your current workload and social obligations.
Directors are usually rewarded with a combination of cash and stock. Cash payments include an annual retainer and a set payment per meeting, as well as reimbursement for any expenses incurred. Stock payments are usually given with an initial grant of stock or options, as well as additional stock for each year served on the board. Retainer fees depend on the company. The average annual retainer for serving on a board is $96,649 and the average board meeting fee is $2,224, as well as stock options or equity grants and additional compensation for committee chair persons according to Spencer Stuart, an international executive search firm. Fortune 100 companies often pay considerably larger annual retainer fees, as well as additional committee chairmanship fees.
Small companies have also been known to award very generous retainer packages. Approximately 75% of all companies pay a per-meeting fee for each board meeting attended. These payments may range anywhere from $500 to $5000 per meeting. It is also possible that directors may gain through stock option grants from the sale or merger of the company.
Boards are generally comprised of individuals from very diverse and accomplished backgrounds. They may have encountered various experiences that may provide insight for the company’s future. From gaining exposure to executives from other industries, or even within the same industry, you may be exposed to others’ expertise in their respective fields.
Finally, if the company that you are serving has a strong management team, board membership will benefit your reputation in the business world. It is a compliment that a company is paying for your input and service.