Board Member Capabilities Requirements

Historically, board members were expected to possess the following attributes: industry expertise, financial acumen, strategic thinking, leadership and management experience, reputation and integrity.

Today’s risk management technical talent not only must meet the aforementioned attributes, they also must be fluent in the language of IT and the dialects of cybersecurity, privacy, compliance, and risk management. They must have hands-on understanding and capabilities beyond historical expectations of board members.

Board Member Duties and Time Requirements

For publicly traded and larger privately held companies, the number of hours of work expected of board members varies depending on factors such as the size and complexity of the company, the industry, and the individual board member's role and responsibilities. In general, being a board member of a publicly traded or larger private company is a significant time commitment that can require many hours of work.

Traditionally, board members are expected to attend board meetings, committee meetings, and other company events, such as shareholder meetings, and to review and analyze company reports and financial statements. Risk management technical talent can also be expected to serve as an interface between the board, management, and the IT and security teams.

The time commitment for board members may also increase during periods of significant change or crisis, such as mergers and acquisitions, regulatory investigations, cyber incidents and/or breaches, or other major events that impact the company.

According to a survey conducted by the National Association of Corporate Directors (NACD) 2022-23 , the average time commitment for independent directors of S&P 500 companies was approximately 245 hours per year. Time requirements for board members serving large privately held companies should be comparable to what is required for publicly traded companies. Time requirements for smaller privately held firms can be assumed to be less–depending on the risk management maturity of that company and other factors.

In all cases, it is safe to assume that at least initially, the time requirement for risk management technical talent will be greater than for other board members.

Board Member Compensation Rates

Typically, board members of publicly traded companies are compensated with a combination of cash and equity-based compensation such as stock options, restricted stock, or performance shares. According to a survey conducted by the NACD in 2022-23, the median total annual compensation for independent directors of S&P 500 companies was $310,000.

It's worth noting that compensation packages for board members may also include additional perks such as insurance coverage, travel expenses, and other benefits.

Based on the data in the NACD report above, the historical average hourly compensation for board members working for publicly traded companies equates to about $1,200.00 per hour, not including any benefits.

Board Compensation for Risk Management Talent

Competitive compensation for risk management technical talent should reflect:

• The risk maturity level of the hiring company and its current board members
• The additional experience and capabilities required of risk management board talent
• The desirability and value of any individual board talent
• The value of any support services accompanying the individual board talent
• The supply and demand of comparable talent

Clearly, based upon the analysis presented above, compensation for risk management technical talent should be higher than traditional board talent.

The exact compensation and benefits are negotiable on a case-by-case basis.