Serving on the board of directors for most banks is not a full-time job. In 2008, the accounting firm of RMS McGladrey conducted a compensation and governance practices survey of the boards of directors of U.S. banks. According to the survey, 56 percent of board members spend less than five hours per month on board activities and 40 percent spend between five and 15 hours per month on board business.
Board members are generally paid an annual retainer and additional “meeting fees” for every board meeting they attend. Board members who serve on banking committees usually get an extra retainer and are paid additional meeting fees for every committee meeting they attend. For chairpersons, the amounts are slightly higher. Additional compensation can come in the form of an equity interest in the bank.
Retainers and Meeting Fees
According to the survey, almost half of banks pay their board members a median retainer of $9,000 annually. This retainer is paid whether board members attend board meetings or not. Eighty percent of banks reported paying their board members an average of $500 for every board meeting they attend.
Board members also serve on various banking committees for which some banks give additional compensation in the form of cash retainers and meeting fees. The amounts of compensation differ by committee. According to the RMS McGladrey survey, fewer than 10 percent of banks pay annual retainers for committee service. For those that do, the retainers are between $200 and $400. Between 33 and 47 percent of banks pay committee meeting fees, which average $250 per committee meeting.
Some banks pay the chairpersons of their boards of directors an additional retainer and meeting fee over and above the basic retainer and meeting fee. Twenty-four percent of banks pay their chairperson an average of $6,000 extra per year and 13 percent of banks pay their chairpersons an extra $300 per board meeting. Board chairpersons who serve on committees also get additional committee retainers and committee meeting fees. Between 7 and 14 percent of banks pay an additional $1,800 to $2,500 annually to board chairpersons for serving on a committee and between 13 and 18 percent of banks pay an additional $138 to $225 per committee meeting.
Total compensation depends upon how many board and committee meetings board members attend. According to the RMS McGladrey survey, the average annual total compensation for chairpersons totals $10,547. The average compensation for board members who also chair committees is between $15,250 and $16,800 and the average total compensation for all other board members is $11,000.
Top Chairperson Salaries
These figures in no way compare to the compensation received by board members of the largest banks. In 2007, the highest paid chairman of the board of directors in the United States was Lloyd C. Blankfein at Goldman Sachs, whose total compensation was $70.3 million. The chairman of the board and CEO at Bank of America, Kenneth D. Lewis, had a total compensation of $24.8 million. Wells Fargo Chairman, Richard M. Kovacevich received $22.9 million. Thomas A. Renyl, executive chairman at New York Mellon Bank, was paid $22.2 million.