As a retired executive, you could make an encore career out of serving on one or more corporate boards. Board membership can be significantly less stressful and time consuming than earlier positions you might have held – while still offering a six-figure income. You might even earn more doing this part-time work, especially when calculated hourly.
At the high end, you could earn seven figures: Former AOL CEO Jonathan Miller earned more than $1 million in 2015 for sitting on eight corporate boards, and former Merck & Co. CEO P. Roy Vagelos earned more than $20 million, mainly in stock options, as chairman of a single board in 2014, the Boston Globe reports.
If you’re interested in pursuing a board seat, here’s what you need to know about what boards are looking for, how to get noticed and what they pay.
What Companies Look for in a Board Member
You can sometimes learn what companies desire in their board members by reading the company’s annual proxy statement. For example, some of the qualities Wal-Mart says it’s looking for in board members members include: "outstanding achievement in their professional careers; broad experience and wisdom; personal and professional integrity; ability to make independent, analytical inquiries; experience with and understanding of the business environment; willingness and ability to devote adequate time to Board duties."
The proxy statement also says the company is seeking “expertise in governance, strategy, development and execution”; people who understand “financial, operational and strategic issues facing large retail companies”; global or international business experience; technology and e-commerce experience; marketing, brand management or public relations experience; finance, accounting or financial reporting experience; or regulatory or legal experience.
The more qualifications you can bring to the table, the better. The company is also looking for diversity and considers a candidate’s “different viewpoints and experiences ... and how those viewpoints and experiences could enhance the Board’s overall effectiveness.”
While these descriptions are fairly generic, by learning about the backgrounds of existing board members, you can extrapolate what the company is probably looking for in new ones. Possibilities include high-level work for the federal government, previous positions as a CEO or director, experience founding and running a successful startup, and experience on other boards. Look for gaps in expertise that might be left when a current board member steps down. Could you fill those gaps?
Boards aren’t just made up of executive retirees and businesspeople nearing the ends of their careers. You will compete for board positions with people who have been extremely successful at a young age. Walmart’s board includes Kevin Systrom, 34, CEO and cofounder of Instagram (see "The Story of Instagram"), and Marissa Mayer, 42, who is well-known for the high positions she achieved at Google and Yahoo.
How to Get Noticed
Your strategy to get noticed and be considered for board membership should be similar to the strategy it takes to secure any other high-level position.
“Make sure you develop a board resume that positions you as qualified for the corporation’s board,” says Renée Hornbaker, who currently serves on the boards of Eastman Chemical Company, The Freeman Company and Tri Global Energy. “Make sure your resume states what you will specifically bring to the table as a board member,” she says.
Executive search firms can streamline the process since they’ll know about available positions. Hornbaker suggests giving your resume to search firms you’ve dealt with in the past and letting them know you’re interested in obtaining a board position.
“Finally, make sure you are networking and letting people know what boards you are suitable for, while also leveraging contacts you might have with the companies that you might be interested in,” Hornbaker says.
You’ll want to pursue networking both online and offline. For online networking, Mark Rogers, CEO of BoardProspects.com, recommends his site, a board-recruitment network akin to LinkedIn. Its members include current board members, aspiring board members and corporations looking to hire board members. Complement your online networking with face-to-face connections at events, conferences and social gatherings, he says. Opening up lines of communication to a second- or even third-degree connection could lead to an excellent fit for the board position you seek.
Hornbaker also recommends becoming educated on the fundamentals of governance and directorship through a program such as the National Association of Corporate Directors Director Professionalism program.
Responsibilities and Compensation
Only outside directors get compensation specifically for serving on the board. Inside directors, such as C-suite level executives, don’t receive additional compensation. By the Boston Globe’s calculations, the median pay in 2014 for a board seat at a micro-cap company (one with less than $500 million in revenues) was $105,583; pay increases with company size, up to $258,000 for board members of the 200 largest U.S. corporations (those with more than $10 billion in revenues).
Hornbaker says pay depends on the complexity of the company, whether it’s public or private, the number of meetings and the amount of responsibility involved. As a board member, your responsibilities would typically include preparing for and attending board meetings, and reviewing company filings and materials, she says, as well as advising management on a wide range of matters, including succession, strategy, compensation and acquisitions.
Adds Rogers, “Board members are the representatives of the shareholders, and it is their fiduciary duty to oversee the affairs of the corporation, including overall performance and fiscal strength, and to serve as a consultant for management – particularly with respect to the strategic and operational directives of the company.”
Formal board meetings where all the directors are present typically occur four to six times per year, depending on the company.
“Obviously, if there is a crisis or a strategic issue – for example, an acquisition – the number of hours for a director can dramatically increase,” Rogers says.
Hornbaker says attending committee meetings might be another responsibility. “For example, audit committees have regular meetings before public filings,” she says. “Another example would be compensation meetings to discuss compensation plans and awards.”
Here are a couple of examples of what Fortune 500 companies pay their board members.
According to the company's 2017 proxy statement, Walmart’s compensation program for outside directors offers base compensation of a $175,000 annual stock grant and a $90,000 annual retainer. Outside directors who hold certain board positions receive an additional annual retainer: $30,000 for the lead independent director; $25,000 for audit committee members and for compensation, nominating and governance committee members; and $20,000 for strategic planning and finance committee chairs and for technology and ecommerce committee chairs.
Apple’s non-employee directors each receive approximately $250,000 worth of restricted stock units per year, which are granted at the annual shareholder meeting and vest on Feb. 1 of the following year. Non-employee directors also receive an annual cash retainer of $100,000. The board chair receives an additional $200,000; the audit committee chair receives an additional $35,000; the compensation committee chair receives an additional $30,000; and the nominating committee chair receives an additional $25,000. Non-employee directors can also get one of every new Apple products on request and can purchase more at a discount.
To find out what any publicly held company pays its board members, read the company’s annual proxy statement, available from its corporate website or the Securities and Exchange Commission website.
The Bottom Line
As an outside director, you could bring a fresh perspective to a corporate board and leverage your years of experience as an executive into a satisfying and lucrative encore career that still leaves you with enough time to enjoy your retirement. While you’ll prepare for, travel to and attend meetings, the Boston Globe reports that the average time commitment to serve on a board is fewer than five hours per week. But you’ll stay mentally engaged by helping to make major decisions for the company, such as who should be hired or fired as an executive, what the company’s policies should be on dividends and stock options, and how much executives should be paid – all while representing management’s and shareholders’ best interests.