The Board of Directors is a linchpin in every organization because of the crucial and vital roles it performs. Although the board doesn’t get much attention as CEOs, 60% of the company’s performance solely depends on it.
That means, when to comes to take-home, the board of directors receives heavy paychecks at the end of the month just like the CEOs and other bodies in a company. These paychecks come as incentives or compensations
This article contains detailed information about the board of directors, their functions, and a glimpse of what their structure looks like. Also, it compiles a comprehensive list of 15 companies with the highest-paid board of directors in the world. Carefully read through!
Who are Board of Directors?
A board of directors is simply a group of people chosen by shareholders to represent them. Every public corporation is required by law to appoint a board of directors; many nonprofit organizations and private companies, while not compelled, do so as well.
What are the Duties of a Board of Directors in A company?
Generally speaking, the board of directors of a company is the trustee of the shareholders. The board of directors also assumes many other responsibilities, including:
- Formulation of dividend policies
- Formulation of options policies
- Recruitment and firing of senior executives (especially executive directors)
- Determination of executive compensation
- Support to executives and their teams
- Maintenance of company resources
- Establishment of company policies
- General objective to ensure that the company is equipped with the necessary tools for management
What is the Basic Structure of the Board of Directors in A Company?
The structure, responsibilities, and powers given to a board of directors are determined by the statutes of a company or organization. Company’s Articles of association typically contain information on the number of board members, how members are elected, and how often board members meet. Generally, there is no fixed number or structure for a board of directors. It all depends on the business or organization, the industry in which the business or organization operates, and its shareholders.
However, it is widely accepted that the board of directors should represent the interests of shareholders and owners/managers and that it is generally a good idea to include internal and external directors.
While the internal director is a board member who invests in the day-to-day running of the company and manages the interests of shareholders, officers, and employees, an external director represents the opinions, views, and interests of those operating outside the company. Note, the Chief Executive Officer (CEO) often also serves as chairman of the company’s board of directors.
What are Companies Expecting After Choosing Board Members?
Every company’s expectation from the board of directors is always listed or outlined in the company’s annual proxy statement. For example, Walmart stated that some qualities it seeks from board members include: outstanding career achievements; extensive experience and wisdom; personal and professional integrity; ability to conduct independent and analytical research; experience and understanding of the business environment, readiness, with the ability to dedicate sufficient time to board responsibilities.
The company’s 4,444 boards of directors are comprised of retired executives, career-ending entrepreneurs, and highly successful young people. 4,444 Knowing the background of the board members’ existing members, you can infer what they are looking for among new members.
Power of Attorney also dec Laró that the company seeks “experience in governance, strategy, development, and execution”; individuals who understand “the financial, operational, and strategic issues facing large retail companies”; global or international business experience; technology and electronics Business experience; experience in marketing, brand management or public relations; experience in finance, accounting, or financial reporting; or regulatory or legal experience.
The company also seeks to diversify and consider “the different views and experiences of candidates… and how these views and experiences can improve the overall efficiency of the board.” Although these descriptions are fairly general, by understanding the background of existing board members, you can infer what the company might be looking for among new members.
This may include senior jobs in the federal government, previous CEO or director positions, experience in creating and managing successful startups, and experience on other boards. Look for the experience gaps that current board members may leave when they resign. Can you fill these gaps?
The board of directors is not only composed of retired executives and entrepreneurs who are about to end their careers. You will compete for board positions with people who achieved brilliant success in your youth.
Wal-Mart’s board of directors includes 46-year-old NBC Universal president Cesar Conde and 45-year-old Marissa Mayer, who is known for his high positions at Google and Yahoo.
15 Highest Paid Board of Directors
Below is a list of 15 companies with the highest-paid board of Directors:
- Twenty-First Century Fox Inc.
- Regeneron Pharmaceuticals Inc.
- Incyte Corp
- Roper Technologies Inc.
- Northrop Grumman
- Occidental Petroleum
- Alpha Natural Resource
- Tysons Foods
- Freeport-McMoRan Copper & Gold
- Chesapeake Energy
1. Twenty-First Century Fox Inc.
Average compensation: $2.58 million
First in our list of the 15 companies with the highest-paid Board of Directors is 21st Century Fox, Inc. This company is a US multinational media company headquartered in Midtown, Manhattan, New York City.
It was one of two companies formed by splitting the publishing assets of News Corporation, founded by Rupert Murdoch in 1980, in 2013. Shareholders of the company agreed to sell most of Disney’s assets on July 27, 2018. $ 71.3 billion.
The sale made up the majority of 21CF entertainment assets, including 20th Century Fox, FX Networks, and National Geographic Partners.
After the bidding war with Fox, Sky plc (a British media group in which Fox holds a stake) was acquired separately by Comcast, and Fox’s FSN regional sports network was sold to Sinclair Broadcast Group to comply with the antitrust ruling.
2. Regeneron Pharmaceuticals Inc.
Average compensation: $2.17 million
The next list is Regeneron Pharmaceuticals, Inc. This is an American biotechnology company headquartered in Westchester County, New York, about 25 miles north of Manhattan.
The company was founded in 1988 by Leonard Schleifer and scientist George Yancopoulos.
Originally focused on neurotrophic factors and their regenerative abilities, after giving its name, the company has advanced into two studies: cytokine receptors and tyrosine kinase receptors. The company’s shares are reported at $1.3 billion and $900 million, respectively.
3. Incyte Corp.
Average compensation: $1.13 million
Incyte Corp is among the highest-paid board of directors companies with an average compensation of $1.13 million per board member. The company is an American pharmaceutical company headquartered in Arapokas, Delaware.
The company was founded in Palo Alto, California in 1991 and went public in 1993. Incyte has one drug, Jakafi that is approved by the US Food and Drug Administration (FDA) and is prescribed to US patients.
4. Roper Technologies Inc.
Average compensation per board member: $973,923
Roper Technologies, Inc is next on our list with an average compensation of $973,973 per board member. Roper Technologies, Inc is an American diversified industrial company that manufactures products designed for global niche markets. Its headquarters are in Sarasota, Florida. Roper provides a wide range of products and services to customers in over 100 countries.
The company has four main business lines: Industrial Technology, Radio Frequency (RF) Technology, Scientific and Industrial Imaging, and Energy Systems and Control. Loafers entered the Russell 1000 Index in 2004, and as of 2017, has annual sales of over $1.23 billion.
The company was founded by George D.Roper in the late 19th century, primarily as a manufacturer of household appliances, pumps, and other industrial products. Roper started a corporate takeover program that was funded by going public in 1992.
Average Compensation: $941,802
Hewlett-Packard is another company that has the highest-paid board of directors in the world. This company’s shares plummeted quite 50% within the past two years.
However, part of the company’s woes stems from a decline in demand for several of HP’s products, notably its PCs. Furthermore, the corporate has struggled to stay a permanent slate of executive and board members.
Former HP CEO Mark Hurd was fired in Aug. 2010, following discrepancies in his expense accounts. Former CEO Leo Apotheker served but a year in his position before being terminated by the board in Sept. 2011.
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Average Compensation: $898,993
Amazon can’t be found wanting in this list. Currently, Amazon’s CEO and founder, Jeff Bezos, is the largest shareholder (19.5% common stock) and has considerable leeway in determining the remuneration of its board members.
Basically, Amazon’s directors are not paid in cash but are exclusively compensated for limited inventory and options. This is rare for publicly traded companies. In 2011, three independent directors, John Seeley Brown, Sort ·Mony Jonathan Rubinstein, did not receive board compensation.
However, Brown and Mony received a limited stock of 3,600 trees in February 2012. Rubinstein, on the other hand, was the only director to receive $ 883,350 in 2010. The only paid director who did not receive $ 927,100 was Breakkir Korean, who joined the board in September 2011. He received $ 786,564.
7. Fidelity National Information Services
Average Compensation: $849,691
Fidelity National Information Services is another company with high-paid board directors in the world. The company is a legal entity that survived the 2005 merger of Certegy and Fidelity National Financial or “Old Fidelity”. The board of directors consists of members of Old Fidelity and Certegy.
In this case, the obvious singularity is William Foley, who earned $ 3,488,791. He is currently Vice Chairman of the Board, chairing the Board by February 2011 and chairing by March 2012. Even if Foley wasn’t mixed, average board compensation was over $ 300,000 part-time job.
Average Compensation: $725,589
With an Average Compensation of $725,589, follows suit in our list of top companies with the highest-paid board of directors.
Oracle co-founder and CEO Larry Ellison own a large share of the common stock (22.4%), which gives him considerable power to form a board of directors. Donald Lucas, Director of Best Compensation, earned $1,023,231 at Oracle in fiscal 2011.
He has been on the Board since March 1980. He served as Chairman of the Board of Directors from October 1980 to May 1990 and as Chairman of the Executive Committee. Positions were deleted from December 1985 to June 2008. Oracle has a hardened board inside. The Chairman is the former CFO, and two partners serve on the board, including former HPCEO’s MarkHurd.
9. Northrop Grumman
Average Compensation: $696,717
Unlike many other companies on the Northrop Grumman list, Northrop Grumman outliers have no current or former executives. Rather, the average compensation figures were distorted because of the compensation of senior outside director Lewis Coleman, who received $ 5,652,356 in 2011. Most of his payments are cash or stock-free.
The company “paid a whopping $ 5,203,559 for security protection associated with Coleman, which includes $ 1,515,536 for” personal and family travel on company aircraft “and $ 174,953 for a” total tax increase. It’s a pretty good deal given that you can make a lot of money because you’re President and Chief Financial Officer (CFO) of DreamWorks Animation.
Average Compensation: $690,053
Compared to some of the companies on this list, Salesforce.com is a very small company, with 2011 revenues of less than $2.3 billion. Nonetheless, the company averaged close to $700,000 as a director last year.
Founder and CEO Marc Benioff left Oracle, appearing later on this list, in 1999 to start Salesforce.com. He currently owns 7.8% of the common stock, and the Board. Another connection with another company on this list is Lawrence Tom Lynn Thorne, who has been a director since May 2003. Tomlinson retired from Hewlett-Packard in June of that year.
11. Occidental Petroleum
Average Compensation: $645,242
According to a 2010 analysis of the Wall Street Journal, Rayirani, the original CEO of Occidental Petroleum (NYSE: OXY), was the highest-paid American in earning about $857 million between 2000 and 2010. He was one of the CEOs.
Irani may have been pushed back as CEO and chairman, but his pay package was still large. Occidental’s highest-income director was Aziz Syriani, who earned $1,052,265 in 2011. He joined in 1983 and served as director longer than Irani.
The average may be pretty high, but John Charrusti (joined 1996) and Irvine Maloney (joined 1994) served as directors until the June 2011 annual shareholders’ meeting. That year’s payments were $65,151 and $29,908, respectively.
Average Compensation: $563,954
Former CEO of Ball Corporation, R. David Hoover, was rewarded for both his day-to-day work and the services of the Board of Directors. Hoover retired as CEO in January.
He continued to serve as chairman in 2011. He paid $3,532,234 in 2011. The company’s power of attorney also showed that he had received a January 2011 payment while he was still CEO.
Directors of other companies ranged between $200,000 and $300,000 in 2011. Alpha Natural Resources Alpha Natural Resources (NYSE: ANR) is the result of the merger of both the 2009 Foundation Coal and the 2011 Massey Energy.
13. Alpha Natural Resources
Average Compensation: $549,445
The merger has undergone significant changes to management and directors. Former CEO of Alpha, Michael Quillen, paid $ 2,610,776 in 2011 as part of the post-Merger Foundation Coal payment agreement, resulting in higher average board compensation.
Quillen can gain certain benefits within up to 24 months after finishing his CEO position at Alpha in July 2009 and dismissing him. The deal ended last year, so Alpha isn’t going to list next year.
14. Tyson Foods
Average Compensation: $542,013
Tyson Foods has significantly distorted average board member compensation due to John and Don Tyson’s payments. The current chairman, John Tyson, received $ 3,295,168 in 2011. In return for working up to 20 hours a month, he can receive $ 500,000 in cash annually through a consulting contract through October 2020. , Use of company aircraft and security services, other costs.
Meanwhile, John Tyson’s father, Don Tyson, received a $1,274,588 salary package in 2011. This includes cash compensation, use of company-owned aircraft, life insurance premiums, tax returns, taxes, and real estate planning.
After Don Tyson’s death in January 2011, a portion of the cash compensation of $319,048 is paid out to his three surviving children.
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15. Freeport-McMoRan Copper & Gold
Average Compensation: $541,836
Freeport-McMoRan (NYSE: FCX) didn’t have more than 10 times the average salary, but its co-founder, Vice Chairman BM Rankin, earned $ 1,274,903 in 2011. Unlike other directors, the 82-year-old former executive received $ 816,000 from consulting.
Details of his consulting deal weren’t disclosed, but even without the huge board compensation of Rankin, board members are still receiving great compensation despite the company’s share price declining. .. Former KPMG CEO Jon Madonna, a minimum wage director, still received $ 418,403 in 2011.
16. Chesapeake Energy
Chesapeake Energy was difficult. The company lost $28 million in 2011. The company continues to rush to report over $1 billion in loans, using its stake in the wells of Aubrey McClendon, CEO for the past three years, as collateral.
This raised many questions about conflicts of interest and corporate governance. Nevertheless, in 2011, it paid over $500,000 to all but two directors.
The board is soon reorganized under powerful pressure from shareholders. The Oklahoma City-based company announced Monday that four of its eight non-executive directors will resign this month and replace them with new directors elected by the company’s second-largest shareholders, Southeastern Asset Management and CarlIcahn. Macurendondo resigns as chairman and a new independent director takes office.
With these fat paychecks board of directors earn, there is no doubt that they are indeed a viatl asset that any big or large organization cannot do without.