The Advisors' Blog

– Liz Dunshee

Recently, Compensation Advisory Partners surveyed non-employee director pay practices among the 100 largest companies. This WSJ article describes the findings. Here’s an excerpt:

– Director pay at large U.S. companies continues to creep upward: half paid a typical board member $300,000 or more last year. As compared to the S&P 500, a 2016 WSJ analysis found median pay was between $230,000 – $295,000.

– As a result of litigation (e.g. Investors Bancorp), 54% of companies now have an award limit for director compensation – up from 47% in the prior year. However, the limits are often significantly above existing pay levels. About half the companies limited pay to between $500,000 and $1 million, and most set limits at least triple what they currently pay in equity grants.

– Other features of director compensation haven’t changed much. Most pay annual stipends rather than per-meeting fees. Equity makes up about 60% of pay overall—primarily restricted stock rather than options—with the rest paid in cash.

– Directors who head key committees tended to receive additional fees, with a median of $15,000 to $25,000, depending on the committee.

– The median additional amount received by lead directors remained about $35,000, while the median additional fee paid to non-executive chairmen was about $233,000.

Also see this blog from Mike Melbinger: “Boards Should Review Non-Employee Director Compensation in Light of Adverse Court Decisions.”