November 14, 2016
Director Pay Caps: More Companies Disclosing Them
– Broc Romanek
Not surprising given recent court decisions in this area, this Equilar blog reports how more companies are disclosing director pay limits. Here’s an excerpt:
According to an Equilar study, 80% of companies in the S&P 100 proposed or amended an incentive plan involving directors in proxies filed between January 1, 2011 and September 30, 2016. Of those companies, 28.8% explicitly mentioned a dollar value cap on director awards, and more than half of these dollar value caps were disclosed in a proxy filed in 2016. The graph below compares dollar value pay caps that specifically mention directors to the median amount a director received in 2015 for that company.
In addition, although 41.3% of these incentive plans mentioned some sort of cap on the number of shares of an award that applied to directors, many were in the hundreds of thousands or millions and designed for executives. Just 16.3% of proposals mentioned a cap on number of shares explicitly referring to non-employee directors, and these limits were anywhere between 6,000 to 100,000 shares.