The Advisors' Blog

– Liz Dunshee

Willis Towers Watson recently published its annual analysis of director pay levels and practices among S&P 500 companies. As I’ve previously blogged, arrangements have been pretty consistent year-over-year – but the memo gives a detailed breakdown of the value of different pay components on an average and median basis – as well as at the 25th and 75th percentiles, and as compared to 2018 and 2019. The info on stock ownership guidelines is also useful, as investors continue to want companies to demonstrate a focus on long-term value creation.

The memo also notes that 68% of S&P 500 companies have now set annual compensation limits for directors – a 4% increase since last year (and a practice that will likely persist in light of Delaware case law). Here’s more detail:

– Of the companies that have newly adopted limits, 91% of the limits cover both cash and equity and 9% cover equity only

– 19 companies updated compensation limits last year – with 74% of those amended to include cash compensation for a combined compensation limit

– Of all the companies with limits, 31% combine fixed-value cash and equity limits, 26% use fixed-value equity limits, and 11% are based on a fixed number of shares

– The median fixed-value limit for cash & equity is $750,000 (unchanged from 2018 and 2019)