As you pursue board opportunities, finding the right one requires thorough research and careful consideration. It’s not just about serving on the board of a company that aligns with your expertise and interests, but it’s also about finding one that is the right fit. You should ask many questions when evaluating a specific board opportunity. Here are some to consider:
Are you targeting certain industries based on your experience, but considering making an exception because of other factors? Make sure you have a good reason to consider it and aren’t just looking at compensation or prestige. If you would really prefer to serve on a public company board and the opportunity is a private company, ask yourself why you’re considering it. Other factors like company size (people, locations) and revenue are important things to consider too, if you have a strong preference for them.
As you evaluate an opportunity, it’s important that it aligns with your preferences. Do you want to be part of a growing early-stage business, guiding it through critical phases of development? Or would you rather contribute to the stability of a well-established organization? Additionally, if you have a specific interest in serving on boards of PE-backed, family-owned or ESOPs, make sure the opportunity meets these criteria.
A comprehensive understanding of director compensation will help you make informed decisions and ensure a fair and rewarding experience. Research the board’s compensation structure -- it varies for different types of companies (public vs private, early-stage vs. well-established etc.). Understand the various components, such as annual retainers, meeting fees and equity offerings, as well as bonuses based on company performance, travel reimbursement and more.
Consider the time commitment required for each board opportunity as it can also vary widely across companies. Inquire about the number of full board meetings each year, plus their durations and location/s. Find out if serving on a committee is mandatory and if so, how frequently the committees meet. Are separate strategic planning meetings and other events required? Don’t forget that reviewing board materials and preparing for board and committee meetings also take time, so factor those into your overall assessment.
Inquiring about the company's Directors & Officers (D&O) Insurance policy is a must. If they don't have it, this is a big red flag. D&O insurance provides vital protection in case of lawsuits or claims related to board activities. It protects directors (and officers) from personal financial loss that could otherwise arise if sued for breach of fiduciary duty, misuse of company funds or lack of governance. Policies vary in amount (based on company size, industry and other factors), provide coverage regardless of who initiates the suit (investors, customers, vendors, employees etc.) and reimburse settlements or defense costs that result from covered claims.
Connect with current or recent company directors to gain valuable insights into the board's operations and dynamics. Engage in conversations to understand their experiences, challenges and the overall commitment required. Seek their advice on navigating the selection process and if possible, gain their support to enhance your candidacy.
As you consider board opportunities, approach the questions with careful consideration. Seek expert advice if you’re unsure about the answers. An experienced director or advisor can provide valuable insights and clarify compensation structures, time commitments, industry-specific nuances and many other things, allowing you to make an informed choice. Being prepared will help you confidently navigate the complexities of board directorship and position yourself for success.