January 25, 2022
Director Compensation: 600 Mid-Market Companies
Here’s BDO’s latest study examining director and select board compensation practices of 600 middle-market public companies. Data was collected from proxy statements filed between April 2020 and March 2021 – right in the thick of the pandemic. The study found that, based on Form 8-Ks filed between March – June 2020, 14% companies reduced board pay levels by 50% for an average of six months, but these were temporary reductions. BDO notes that at the end of the year, “retainers and fees were slightly above the prior year, which reflects the recognition that boards face an ever-changing array of complex challenges” – including navigating shareholder activism, tackling changing regulations and monitoring supply chain disruptions & other risks. Here are some of the other highlights:
– Director total compensation increased by 2.3% in fiscal year 2020 over fiscal year 2019
– Committee retainers and fees decreased 2.7%, continuing the trend to provide cash-based compensation through board fees rather than for individual committee work.
– Full-value stock awards continue to outpace stock options. Stock awards increased 2.5% over the prior year, whereas stock options decreased by 11.6%. Total equity compensation rose 2.2%
– For middle-market companies, industry membership is a critical consideration when benchmarking director compensation. Directors in the healthcare and life sciences and technology industries are the highest paid. On the other end of the continuum, financial services banking directors are paid one-quarter of the compensation received by those in the highest paying industries.
– Emily Sacks-Wilner