Further, many corporations of all sizes issue stock options to their directors. Today, the income an outside director receives is a significant factor in deciding which board offers he or she chooses to accept. Just as the compensation of outside directors has risen over the years, the job of the director has become more complicated and sophisticated. It requires more talent and experience and takes a great deal more time. With the new S.E.C. audit responsibilities now being advocated, this post involves expertise and hard work.
Few people have sufficient qualifications.
He or she must understand the intricacies of the executive compensation programs of the company and the industry and be prepared to defend them, sometimes under high-profile circumstances. Again, this post requires special knowledge, experience, and time. Here again, also, qualified candidates are limited. The chairman usually supervises the recruitment and nomination of new directors, determines their compensation, and appoints members and chairmen of the board committees. He or she also coordinates the evaluation of the performance of the CEO, the board, and individual directors.