April 19, 2018
Director Pay: 18% Don’t Review Annually
– Liz Dunshee
This Deloitte memo explains why director pay is a “hot topic” & summarizes popular structures to consider. But one stat surprised me – 18% of boards don’t review director pay annually. This is risky because ISS will recommend a vote against committee members if director pay is “excessive” in two or more consecutive years.
According to the memo, here are six other practices to avoid:
1. Excessive pay levels set based on an inappropriate peer group
2. Performance-based pay
3. Significant use of stock options instead of full value share awards (e.g., restricted stock or restricted stock units)
4. Perquisites (with the possible exception of matching contributions to charitable organizations)
5. Payment of compensation despite missed meetings
6. Retirement benefits, such as pensions and retiree medical