Board of Directors Compensation

Family & Privately Owned Business Board of Directors Compensation

Family and privately owned businesses have unique needs when it comes to board of directors compensation. The BCG team has provided services to six of the top 20 largest family offices in the entire US. 


The Competition for Board Talent

Good governance of your family or privately held business relies on its board of directors’ oversight, decision-making, and fiduciary accountability. An effective board keeps the business on course, leading to increased profits, while an ineffective board of directors can cause irreparable damage.
You can avoid the latter scenario by attracting the best talent for your board with a competitive board of director compensation plan. We know your family or privately held business is competing for the same director talent with public companies, so we approach your board of director compensation strategically, aligning your family and business goals with the compensation structure so members are incentivized to help you achieve your goals. 

Steps in Board of Director Compensation Planning

  • Benchmarking

    Benchmarking board of director compensation is the first step to formulating a plan. We review data in the context of your industry, location, and type of business. We understand the unique benchmarking requirements of family and privately held businesses.

  • Evaluating

    Step two in compensation planning involves reviewing the benchmarks against the current compensation of board members and then measuring that against the business and family goals. Precise evaluation requires deep experience with family and privately held businesses.

  • Incentive Planning

    Once we have benchmarks and an evaluation, we can design the right incentive plan to motivate your board members to achieve your family and business goals. Private companies must structure director incentives differently than public companies, but there are still plenty of mechanisms available to support growth.

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While data for board of directors’ pay at public companies is plentiful, statistics on board compensation in private companies is much harder to come by. However, we have our hand on the pulse of how similar family and privately held businesses are compensating their boards and know the current trends.

We examine board members’ annual cash retainers, meeting fees, equity retainers, and their total compensation. So that we get an apples-to-apples comparison, our review of the board of directors’ compensation data includes the context of company size, location, and industry.

Benchmarking board of director compensation for family and privately held businesses is unlike that of other public or private companies. Only someone with deep experience in family offices can get it right. We are the premier provider for board of director compensation benchmarking.



Benchmarking is just the first step in formulating your board of directors’ compensation plan. In the evaluation stage, we examine the benchmarks against the current board compensation structure and the business and family goals.

Evaluating family business compensation is unique in that the board can contain non-employee family members. These directors do not work for the company, but they are members of the family that own the business. They receive no compensation or a reduced rate compared to their fellow directors. Because of our long experience with family offices, we can take these situations into account and still identify the levers that will drive the desired behaviors.

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Incentive Planning

Directors who are not employed or affiliated with the family or privately held business are valuable because they offer a different perspective and have no conflicts of interest. Outside directors also add credibility to private companies, signaling to investors that the company is serious about professional guidance. However, attracting and retaining board talent requires a competitive incentive plan.

Incentive planning for board of directors’ compensation in family and privately held businesses is an uncommon process that requires skill and experience. While many privately held companies don’t award equity in their board compensation plans, there are many instances in family-owned businesses where the family wants the board to share in some of the value creation. BCG has done more simulated equity plans than any other firm and has the experience to navigate the process successfully.

We align the structure of the board of directors’ compensation with economics, business, and family goals to create a win for everyone. 

Education and Communication

We balance education and communication to create a comfort level with your team. Dozens of family offices just like yours trusted us to guide them to the finish line.

Our board of directors compensation planning process has four phases. 

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Phase I:Discovery

We conduct interviews, collect data, review current roles, pay levels, and goals.

Phase II: Benchmark & Analysis

We benchmark pay and benefit levels and analyze the competitive market.

Phase III: Reporting

We present our findings and recommendations for designing the incentive plans.

Phase IV: Final Plan

We offer multifunctional programs that include the needed set of features and support services.

We always get our family and privately held businesses through each phase.