The Advisors' Blog

– Lynn Jokela

A recent report from ClearBridge Compensation Group takes a look at trends in non-employee director compensation.  The report examines compensation for non-employee directors among 100 of the S&P 500 from 2009 – 2019 and looks at median compensation levels for board service, committee chair and board leadership fees and compensation mix.  The report also looks at non-employee director stock ownership guidelines and here’s some of what it found:

– Stock ownership guidelines have become significantly more prevalent, from 63% of companies in 2009 to 94% in 2019, further increasing the alignment between directors and shareholders

– The specific ownership guideline (as a multiple of the annual board cash retainer) has also increased; while 3x and 5x were common in 2009 (34% and 46%, respectively), 85% had a guideline of at least 5x in 2019

– A majority of companies in 2019 required directors to retain shares of company stock for a specified length of time, either through a holding requirement (15% in 2009 and 21% in 2019) or a mandatory equity deferral feature (24% in 2009 and 32% in 2019)