Optimal composition of captive boards panel, VCIA 2019 Conference
A panel discussing the optimal composition of captive boards at the VCIA conference has stressed the importance of paying board members, dismissing concerns that this could lead to a conflict of interest.
The absolute level of pay captive board members can expect is impossible to pin down, and varies in each case depending on various factors. In particular, the number of board meetings members are expected to attend is an important factor, said Derick White, managing director of corporate governance and regulation at Strategic Risk Solutions.
“If people are taking time out of their day it is appropriate that they are compensated,” said Margaret Nekic, president at Inspirien. “Companies need to ensure they are focused on the business of the board, not on other things concerning their day jobs. You get that by paying them.”
White agreed, noting that people have to take time out of their day, and in some cases may have to shut their normal businesses, which can mean loss of earnings.
Panelists stressed the importance of incentivising people to attend board meetings in person, rather than treating them as an afterthought, as they might if the work is unpaid.
If people are dialing in on the phone they may not be paying full attention, explained White. Having board members in the room ensures everyone is fully engaged. “When you are face to face with the other board members that allows you to really get into the details,” he said. It also helps satisfy regulatory requirements that business is being conducted within the jurisdiction, he added.
Strategic Risk Solutions, Vermont Captive, VCIA 2019 Annual Conference, Captive, Insurance, Derick White, North America