2020 Inside the Private Company Boardroom

Privately held companies are a massively important part of the economic landscape. Yet, relative to their public company peers, the directors and governance professionals who serve these organizations have few data sources to consult regarding the structure and composition practices of their boards.

The 2020 Inside the Private Company Boardroom report aims to fill this void, providing survey data addressing the shape of the private company board and its director compensation practices.

Key Findings

• Board Committees: The nominating and governance committee is not as common among private companies as it is among their public company peers, with only a slight majority of respondents (55.9%) indicating that their board has such a committee.

• Board Composition: Just under a third of private company respondents indicate that their board has recently appointed a candidate from an underrepresented group on boards.

• Independent Director Compensation: A large majority (85.7%) of private company boards compensate their directors.

About NACD's Inside the Private Company Boardroom report

Data presented in Inside the Private Company Boardroom was collected in a survey of NACD members serving on boards of for-profit, privately held companies. It was in the field in August of 2020, and the data collected was analyzed to create a snapshot of the structure, composition, and compensation practices of these boards.

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.