BSG From the Boardroom

An Introduction to Board Director Compensation & Considerations:

Navigating the landscape of Board Director compensation and recruiting fees reveals a wide-ranging spectrum, spanning from 25K to 200K or more. This intricate pricing variance is a product of diverse factors, including business size, ownership type, role specificity, and unique attributes sought in board members. BSG put together a list of criteria utilized when reviewing the possible aspects that are mission-critical in your next board search.

1. Board Director Compensation and Recruiting Fees:

   • Evaluate compensation range from 25K to 200K or more.
   • Assess associated recruiting/search fees.

2. Business Size:

   • Consider the size of the business: small, medium, large, mega.

3. Ownership Type:

   • Identify ownership type: family, bootstrapped, private, ESOP, public, for-profit, non-profit, etc.

4. Type of Board Director Seat:

   • Determine the type of board director seat:
     • Outside director only.
     • Outside director and committee chair.

5. Committee Structures:

   • Assess committee involvement:
     • Popular committee structures: Audit, Nominating, Compensation, etc.

6. Board Chair Role:

   • Define role as:
     • Board Chair.
     • Executive Board Director.
     • Non-Executive Board Director.

7. Special Characteristics Needed:

   • Consider specific traits required, such as:
     • Diversity candidate.
     • Sitting CEO (currently a CEO of another company).
     • NON-operating board director (retired or without full-time operating responsibilities).
     • "CEO-whisperer" (mentor/coach/advisor to the CEO).

8. Time Investment:

   • Evaluate time commitment in steady-state case:
     • Frequency of board meetings (quarterly, monthly).
     • Percentage of meetings held in person vs. virtual/remote.
     • Consideration of an annual board retreat.
     • Travel requirements to/from in-person meetings/company location.
     • Interstitial board call demands (if any).

9. Search Firm Compensation:

   • Understand that the search firm's compensation is linked to board director position compensation.
   • Recognize that a common estimate for search fees is "1x first-year board cash compensation."