A snapshot of what their directors are paid (underpaid?).

• Author: Tenenbaum, Bernie
• Position: PRIVATE COMPANY BOARDS

Ed. Note: There is a wealth of compensation data available for public company directors, but private company board data remains much more elusive. One of the few specialists in private company director compensation is Bernie Tenenbaum. He is managing partner of Lodestone Global, a firm that provides strategic guidance to chief executives of private and family-controlled enterprises considering forming or adding members to a fiduciary or advisory board (www.lodestoneglobal.com). He has deep roots in the Young Presidents' Organization, from which he draws to compile his proprietary data on private boards. Lodestone Global recently released its 2013 Private Company Board Compensation Survey and he reviews a few highlights from the survey in the following article.

One of the most common questions that companies ask me about their board is, "How much should we pay our directors?" The simple answer is, "It depends." There are many variables that determine director compensation: Do you have a fiduciary or advisory board? How many times a year do you meet? What industry are you in? What business structure do you have? ... and other considerations.

Lodestone Global's 3rd Annual 2013 Private Company Board Compensation Survey analyzes current board practices and compensation around the world. It includes 203 companies across 10 different industries. All the respondents were members of the Young Presidents' Organization (YPO-WPO), an international group of presidents and CEOs. The organization unites approximately 20,000 business leaders in more than 120 countries. The 203 respondents were all CEOs of companies ranging from $10 million to over $10 billion in revenues.

With nearly 30% of the respondents representing 30 different countries, this survey is one of the first attempts to explore the variances between domestic and international private company director compensation. In fact, the results showed that domestic companies paid their directors 12.7% more than their international counterparts (see Exhibit 1). So one might ask: Why are international directors paid less? Are they significantly less effective at driving corporate strategy? Do they just work more cheaply?

EXHIBIT 1 Private director compensation U.S. Data Average Medium 2012 Annual Retainer $14,158 $2,000 $20,000 Per Meeting Fee $1,479 $2,500 $2,500 Per Teleconference $939 $1,000 $750 Total Compensation $21,952 $32,000 $31,500 International Data Average Medium Annual Retainer $16,675...