Is Director Pay Different in Public vs. Private Banks?

By Matt Brei

Is Director Pay Different in Public vs. Private Banks?

At Blanchard Consulting Group, we frequently get asked if directors get paid differently based on whether they are serving on a public bank board (defined as an SEC filing bank that is traded on an exchange) versus a private bank board.  The typical answer for this question has been that the average director for a public bank does get paid more than that of a private bank in similar sized institutions.  Director compensation has always varied based on asset size of the institution (larger banks typically pay more than smaller banks), but in this article we will review director compensation data for both public and private banks and explore the differences.  We will then discuss why this difference may be appropriate based on the expectations of directors at each type of bank.

Blanchard Consulting Group Data Summary

1) An average director excludes the board chair, partial year directors, and any directors with extraordinary events.

Total Director Compensation per Average Director

Discussing the data findings

The data summarized above shows that there is a significant difference between the median director compensation levels at public banks versus private banks.  We pulled data from our 2025 Director Compensation Survey and our proprietary database for banks below and above $1 billion in assets.  The director compensation levels varied significantly based on if the bank was public or private.  The percent increase was relatively consistent over the two asset categories at 55% and 60% percent higher for the public banks when compared to the private banks.  The message was clear, public bank directors get paid more than private bank directors at similarly sized banks.

Why would public bank directors be paid more?

Why would public directors be paid more?

When exploring the why behind the data findings, it takes a little explanation and digging.  Private and public bank directors are expected to contribute time and expertise to their shareholders and the board.  However, the liability and scrutiny is often higher in a public bank situation.  Here are some examples of how the expectations may differ for the bank board directors.

Governance, Transparency, & Regulatory Scrutiny

Public Banks:

Directors of public banks— with shares traded on public stock exchanges—are subject to rigorous governance standards and transparency requirements and must adhere to regulations set by the U.S. Securities and Exchange Commission (SEC). Theses regulations include robust financial disclosures, annual reports, and other financial reporting requirements. Public banks also undergo frequent audits and are more heavily scrutinized by both financial and securities regulators. Directors must ensure compliance not only with banking regulations but also with investor protection laws. Failure to comply can lead to significant penalties, loss of investor confidence, reputational damage, and even shareholder lawsuits and litigation.

Private Banks:

Private banks are not subject to the same level of disclosure requirements. Directors are still bound by regulatory requirements in the banking industry, but they do not include the level of transparency that SEC filings include. The risk for public scrutiny as well as potential litigation is less for a private bank.  However, these private banks are still held to high standards by financial regulators, especially if they handle significant deposits.

Stakeholder Accountability & Director Position Security

Public Banks:

Directors of public banks are accountable to a wide range of stakeholders and shareholders. They face pressure from institutional investors, analysts, and sometimes activist investors focused on short-term performance and share price appreciation. This can lead to a heightened focus on earnings and higher expectations.  Public banks can also be pressured to remove directors and change directors if they don’t meet expectations.  There is a focus on director skill development, diversity, and continuing innovation and growth.

Private Banks:

In private banks, the director's accountability is primarily to a smaller group of shareholders or family owners. This tighter ownership structure often allows for greater alignment on long-term goals and a stronger emphasis on stability and legacy rather than immediate financial returns.  Usually, directors are given more time to develop skills and external pressure to remove directors is minimized.

Summary

In summary, both public and private bank directors are expected to provide strong leadership and strategic direction to their institutions, have an understanding of the banking regulatory environment, and represent their shareholders in an engaged manner.  However, public bank directors also have to navigate higher levels of public scrutiny, regulatory oversight, and accept more potential liability.  As such, directors on public bank boards receive higher levels of compensation for these additional responsibilities.

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