Compensation isn’t everything. Here’s how boards can differentiate their membership offer
Sitting on a board, particularly that of a large public company, can be a financially lucrative gig. But it’s not the only reason executives accept board membership. As company priorities evolve and expand, boards are looking to diversify their demographics and the skills members bring. But like any job, boards that want to attract and recruit top executives must fully understand the various factors and benefits that stand out to potential candidates.
Compensation is relatively uniform across public companies, so it doesn’t offer much of an opportunity anyway to differentiate in an increasingly competitive market for diverse, qualified directors.
Today’s workers want to be part of a company where they feel connected to its mission. The same holds true for prospective directors, says Shannon Nash, the CFO of Wing, a delivery drone service owned by Alphabet, and lead independent director at the software company UserTesting. Nash is considering joining a second board, and has a good sense of what she’s looking for in her next role.
“Comp is an important piece, but also, do you really believe in the people, the mission, and the product?” Nash says. “You’re going to be spending a lot of time…with these people, with this board, and the company. Does it make sense for you, with all things being equal, to invest that much time in that company?”
Nash is also bearing in mind the workload, heeding advice that full-time executives should not be on more than two boards, with some exceptions. “I think that the people who can do more…at least one or two of the boards are either in an industry where they have super deep knowledge or it’s complementary to their day job, so it’s not like it’s extra work.”
Board director workloads have increased in recent years, with more meetings and decision-making on weighty topics like pandemic response, social strife, talent, and diversity. “Directorship has become an actual job,” Friso van der Oord, senior vice president at the National Association of Corporate Directors, previously told me.
But that’s not to say that the financial component isn’t important. Although private companies typically pay much lower cash retainers than public companies, these boards can highlight one incentive that public boards don’t have: the long-term value of stock options at the point of exit or IPO. S&P 500 boards, on the other hand, offer a higher cash retainer of $131,644 on average, and stock grants that make up 56% of total compensation, averaging a total of $312,279 annually, according to Spencer Stuart.
With board talent more important than ever, companies must consider culture, mission, workload, and the way the board operates when presenting an offer, while meeting reasonably competitive standards for compensation, as outlined above.
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Supply chains shifting. World Trade Organization director Ngozi Okonjo-Iweala said the war in Ukraine and pandemic-related supply chain challenges have forced manufacturers to reduce their reliance on China and spread out their global operations. Companies are prioritizing resilience and reliability in their supply chains over speed and cost efficiency. Some companies are even bringing factories back to North America. Okonjo-Iweala calls this phenomenon “re-globalization” and predicts that it will help developing countries while also altering strategy significantly for energy, manufacturing, and logistics companies. Washington Post
Fidelity okays bitcoin. The largest 401(k) provider in the U.S. announced Tuesday that it will offer bitcoin as an investment option in its 401(k) plans later this year. It is the first major retirement provider to offer cryptocurrency in its plans, but the option will only be available at the discretion of employers. Fidelity claims to have “a number of clients that have committed and a number of others in the evaluation process," and is expecting more following its announcement. To counter the volatility of the investment option, Fidelity is capping contribution to 20% of income, though employers can set the limit lower. Employers should also note that the U.S. Department of Labor has expressed concerns over the inclusion of cryptocurrency in 401(k)s and other retirement plans. CNN
Bearish on Activision. Stock analysts and investors are concerned that the FTC will not approve the proposed Microsoft-Activision merger even if Activision shareholders approve the $69 billion sale. Activision shares are trading 25% below Microsoft’s offer, indicating that expectations for the deal to reach completion are low. Activision’s shareholders are expected to approve the sale, but must await a ruling from FTC director Lina Khan. Khan blocked recent acquisition attempts by Nvidia Corp. and Lockheed Martin and has resurrected the FTC’s monopoly case against Meta Platforms Inc., which seeks to split off WhatsApp and Instagram. Bloomberg
Consumer survey confusion. Two respected surveys on U.S. consumer sentiment are painting starkly different pictures of consumer confidence. A University of Michigan survey says confidence is at its lowest point in 10 years and 26% lower than last year, a sharp drop, which The Economist notes usually predicts a recession. The Conference Board's gauge of customer confidence is slightly more upbeat, perhaps because it also incorporates questions about the job market in its survey. As business leaders remain wary of a recession, Deutsche Bank says this discrepancy is a red flag and predicts a 50% chance of recession next year. The Economist
Valvoline has appointed Jennifer Slater, general manager at Clarios, to its board, bringing “extensive knowledge of the automotive industry - most recently focused on energy storage solutions” to meet electric vehicle needs, according to the company. Sports equipment manufacturer and retailer Escalade Inc. has increased the size of its board from five to six, adding Anita Sehgal, SVP marketing and communications for the Houston Astros of Major League Baseball. Estée Lauder Companies has elected Arturo Nuñes, chief marketing officer of Nubank, to its board and also added him to its audit committee. The fintech company Wahed has appointed former SEC director Lori Richards to its board. Fender Musical Instruments Corporation has appointed Amani Duncan, a longtime music industry executive and current CEO of an advertising agency owned by Publicis Group, and Maria Fernandez, EVP of operations and COO at Sony Music Entertainment, to its board. Former Zillow CEO Spencer Rascoff is joining the board of Varo Bank, an all-digital, nationally chartered U.S. bank. Lindsay Shoemaker, president of Tetra Tech, is joining the board of Schnitzer Steel. Jill Cress, chief marketing and experience officer at H&R Block, has joined the board at Wealth Enhancement Group, a wealth management firm. Investment firm The Carlyle Group has expanded the size of its board, adding two new directors following the departure of Janet Hill. Those two are Linda Hefner Filler, former chief merchandising and marketing officer at Walgreens, and Mark Ordan, CEO of Mednax.
Numbers That Matter
Dapp, an open-source platform for creating decentralized apps, is the fastest-growing tech skill according to research released by Udemy for Business, which reports that course consumption around this topic has increased 600% from last quarter. This indicates heavy interest from across the business world in decentralized apps that use blockchain.