Anyone preparing to serve as a board member will want to know what to expect in terms of compensation. Executive leaders wield considerable power over the direction of an organization and often receive impressive financial packages for their work.
This blog explains the general range of compensation, factors that can influence final salary, and how board management software enhances board member performance.
Do Board Members Get Paid?
Board members are typically paid for their work, but the amount of compensation depends on multiple factors, such as experience, industry, and the organization they serve.
Additionally, their compensation can come in many forms. Instead of a salary, board members can receive payment in the form of per diem payments, stock options, or reimbursement for expenses incurred while performing their duties. In select cases, board members may also receive a stipend of honorarium for their efforts.
For most boards, the compensation committee determines the total compensation package and incentive plan. Typically part of the executive committee, these members oversee financial strategies and ensure the organization maintains a balance between paying board members fairly while prioritizing the company’s financial health.
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How Much Do Board Members Get Paid?
According to Salary.com, the average salary for a board member in the United States is $114,230, but the compensation range falls between $88,079 and $141,071.
The IRS lists certain rules concerning the payment for board members depending on their classification in the management structure. If your board members are defined as independent directors with no stake in the business, then their pay may be exempt from employment taxes. The opposite is true if board members are considered official employees.
Factors Influencing Board Member Salary
While compensation is often outlined in company bylaws, other factors can influence the ultimate amount a board member receives. Here are the 5 factors most likely to influence board member pay:
1. Company Size and Industry
The primary industry of your organization will have considerable sway in board member compensation. Executives who work in sectors such as finance, technology, or health care may earn higher pay due to the stringent requirements of the job. The size of the company in question will also play a role. Larger establishments with access to more resources are more likely to offer bigger deals than smaller organizations.
2. Board Member Responsibilities
Not all board member positions are created equal. The range of responsibilities for each board member will vary depending on the position, such as president, secretary, or treasurer. While each position is vital to the smooth operation of a company, member salaries ultimately depend on their status within the management structure.
3. Company Performance
There’s no better indicator of future performance than past performance. A consistently strong history of productivity should leave the company’s finances in a good place. The positive trajectory attracts greater levels of funding and support from donors or other stakeholders. A track record of success should then lead to better benefits for board members.
4. Experience and Expertise
There’s plenty of merit in giving younger executives opportunities in the boardroom, but years of prior experience will lead to higher salaries in most organizations. The accrued leadership skills and knowledge from previous jobs can become very useful in maintaining or improving the standard of your board meetings, growing your network of contacts for funding and other development paths, and leaving your company better prepared for complex issues.
The wisdom of veteran board members also makes them prime candidates to join other decision-making bodies in the organization, such as an executive committee.
Educational background is another factor that can influence board member pay. Board members with advanced degrees or specialized training in particular fields often earn higher compensation packages.
5. Geographical Location
The differences in cost of living between a metropolitan city and a more rural environment can be vast. Most organizations keep this in mind when offering jobs to executives. Board members may receive higher compensation in an effort to cover their expenses. Of course, this is only possible if the organization has the resources and financial stability to do so.
OnBoard Powers Effective Board Members
As leaders of the organization, board members are often well-paid for their contributions. But even the most accomplished executive needs the right support system to develop their skills. OnBoard’s board portal technology is designed to help board members develop better working relationships, streamline work processes, and achieve their governance goals with ease.
Additional core OnBoard features include a customizable agenda builder, engagement analytics, and board assessments to help your team make better decisions and maximize their management capabilities.
OnBoard also offers robust security measures to keep key information private and secure. Granular permissions, two-factor authentication, and biometric ID keep your data away from unwanted parties.
Ready to learn more? Download our free board meeting minutes template to see how OnBoard makes board meetings a more collaborative and efficient experience.
The comprehensive blueprint for selecting a results-driven board management vendor.
Ready to upgrade your board’s effectiveness with OnBoard the board intelligence platform? Schedule a demo or request a free trial.
About The Author
- Adam Wire is a Content Marketing Manager at OnBoard who joined the company in 2021. A Ball State University graduate, Adam worked in various content marketing roles at Angi, USA Football, and Adult & Child Health following a 12-year career in newspapers. His favorite part of the job is problem-solving and helping teammates achieve their goals. He lives in Indianapolis with his wife and two dogs. He’s an avid sports fan and foodie who also enjoys lawn and yard work and running.
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