How are Outside Directors of a Board Paid?
Q: How are Outside Directors of a Board Paid?
A: The typical compensation package for an Outside (non-employee) Director is made up of a number of elements and can vary according to the role of the Director within the Board. These elements include:
- annual retainer;
- chairperson fees (to compensate for services as a chair of a committee or the full Board. Often, committee chair fees can differ according to the committee on which the Director serves);
- fees for attendance at Board meetings (in person and via tele- or video-conference);
- fees for attendance at committee meetings (in person and via tele- or video-conference);
- initial and annual grants of equity (usually in publicly traded companies).
The size of the retainer and meeting fees paid to Outside Directors can vary significantly from company to company; generally, the size of the company is the major determining factor.
