Director compensation strategies remain a discussion point at many community banks. Recruiting and retaining qualified directors is a key component to a successful organization, but continues to be a considerable challenge with the fiduciary role being the primary deterrent.
Although Compensation Advisors cannot mitigate the fiduciary role, we can bring practical solutions to help enhance director compensation packages. We understand that directors do not serve on a community bank board for the purpose of receiving compensation, however these individuals should receive ‘fair and reasonable’ compensation as many are diverting time and energy away from their primary business to serve the community – this time commitment needs to be recognized and rewarded accordingly.
By looking at both per director and aggregate director fee expense, which include retainer fees, meeting fees, equity compensation, perks and benefits, banks will have the tools needed to design a compensation package reflecting the time and energies spent by those serving on the board.