BSG Executive Search Blog

Criteria for Determining Board Director Compensation and Search Firm Fees

Written by Clark Waterfall | Aug 8, 2023 12:19:13 PM

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."
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