Director Pay Rises 4.5%
Pay for serving on a corporation’s board of directors continues to rise. Compensation for non-employee directors totaled $261,333 in 2012, up 4.5% from 2011, according to compensation consulting firm Steven Hall & Partners.
The firm analyzed the proxy statements of the 200 largest publicly traded corporations, as measured by revenues, in the United States. They found total pay has risen, though the mix of how non-employee directors are compensated has not. Cash accounted for 45% of pay and equity accounted for 55% of pay.
The median cash retainer for board service was $85,000, a 21% increase since 2007. Part of the increase reflects the elimination of meeting fee payments. Just 27% of companies paid board members for attending meetings last year, versus 42% in 2007. The consulting firm thinks companies increased the cash retainer to prevent directors from incurring a drop in compensation. The median fee paid to directors attending a meeting is $2,000.
Equity compensation was mostly made up of stocks. Only 9% of companies granted a combination of stocks and options, while just 3% used options as the sole component of equity compensation. Over two-thirds of equity awards vested either immediately or within one year of the grant. Steven Hall & Partners believes the short vesting period reflects a belief that longer periods “might handcuff directors to boards they wish to leave.” The firm did note, however, the presence of a “notable and consistent minority of companies” granting equity with a multi-year vesting period.
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