I receive this question frequently – from the entrepreneurs who want to set up a board and from the communities of professionals who aspire to the position of non -executive and independent board members. In this article, I will refer only to this category of board member – non -executive and independent, considering that for the Executive board member there is no clear delimitation between the occupied positions – executive director, respectively a board member, and a member who is not independent has other roles within the group of companies. The remuneration of a non -executive and independent board member reflects not only the allocated time, but also the professional experience, the reputational exposure and the strategic contribution. In practice, the remuneration is often established, without a profile market analysis and without a real correlation with the added value of the role. How much should we pay for a high -performance board? When is the remuneration too big? But too small? There are essential questions, especially when we first build a professional corporate governance framework. I have encountered situations in which modest remuneration attracted experienced members, at the first appointment, rather interested in a new beginning or networking opportunities. And I do not mean the state companies, in which the «attractiveness» of these positions sometimes comes for other reasons, which are less related to the formal remuneration. At the opposite end, I saw cases where the remuneration are so high that they raise question marks: are they related to other benefits, masked as a board activity? Does it reflect a generosity encountered in the case of other categories of employees or creates suspicions of integrity and ethics? Below I will present three possibilities of proper calibration of the remuneration of the board members. First of all, we are in full season of financial reports, the listed companies will publish the annual remuneration reports and thus we will be able to analyze the trends in the compensation of the management teams. The remuneration in the listed companies offer a useful benchmark; It should be considered and analyzed separately the regulated companies, such as those supervised by the NBR or ASF, in which the levels of compensation are significantly influenced by the numerous requirements for occupying these functions. A two variant of calibration proposed, starts from the comparability of the remuneration of the board member with that received by other liberal professions. For example, I propose a simple calculation for obtaining the remuneration: multiplying the hourly fee of the senior partner in the law firm used by the company, 15-20 hours, the average number of hours invested by a board member. The relevance of the calcium comes from the experience and similar expertise of the professionals in these categories, as well as from the fact that the size and complexity of the business should be found in the quality and reputation of the lawyer companies used, the senior partner. There are differences to be considered but I will score only one – both the lawyer and the board member emit opinions related to various spects, but unlike the lawyer, the board member has legal responsibility for the decisions taken. The third proposal for the calibration of the remuneration is based on the comparison with the salary of an executive director, namely the comparison of its salary with the sum of the remuneration of the non -executive and independent members. For example, in a board of 5 members, of which 3 non -executive and independent members, the sum of their remuneration can be comparable to the fixed salary of the executive director. The relevance of this comparison is based on several arguments: there is proportionality between the company's size, the level of the salary granted to the executive director and the number of non -executive and independent members, respectively the consolidated value generated by the board members through the strategic contribution, the decision -making balance, the credibility and the role of ambassadors for the company. In practice we have encountered different compensation structures, determined by the size and specificity of the company but also by the objective pursued at the establishment of the board, the degree of involvement and decision -making of the board members. Also, the compensation package can include a variable component, program for granting shares, additional payments for participation in committees and additional payment for the role of board or committee. The organization of a good and professional board is not an expense, but an investment. The relevant question is not «how much do we pay?», But «what do we want to get instead?». In Romania, the profession of non-executive and independent board member is in development, and already forces us to recognize its essential role in the sustainable growth of companies and to strengthen the trust of stakeholders. Fortunately, we notice positive evolutions! Ciprian Ladunca is Managing Partner LCL Advisory, a board member in various companies and chairman of the Corporate Governance Committee, Amcham Romania.
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