How Much Does a Board Member Make?
Board compensation plans vary greatly. From simple to complex and from cash only to cash, equity, long term comp, benefits and perks.
There is no absolute rule on compensation but generally the larger the company the larger the compensation costs. From a company standpoint, the real costs not only include director compensation but additional costs based on the number of meetings, travel expenses for out of town directors, directors insurance, outside board resources, etc. These costs can easily amount to an additional 50% of what a company pays their directors.
From the board members perspective, you need to consider your time and your value and what non-compensation related benefits you get from being on a particular board. Ask yourself how much would you bill out your expertise on an hourly basis times the number of hours you will spend per year on the board activities both directly and indirectly. Be as objective as possible about what it is worth to you or your career to be associated with a particular board.
Let us not make the mistake of putting too much emphasis on compensation. Of all the directors and advisors I have met over the years, there is not one that would rank compensation in the top three reasons they serve on a board. Being an insider helping another organization grow, gaining invaluable lessons on business issues that can be used in the directors business, new network of contacts, etc. are all typically ahead of compensation in considering a board opportunity.
Board compensation can range from $500 per month to over $100,000 per year so the variance is very wide.
Boards provide value and that value needs to be recognized and compensated. The National Association of Corporate Directors (NACD) is a valuable resource around board compensation benchmarks by size of company and industry.