January 4, 2023
FW Cook’s Director Compensation Report
FW Cook recently issued its annual Director Compensation Report, which reviewed director comp at 300 companies in order assess market practices in pay levels and the structure of compensation programs. This excerpt provides an overview of some of its key findings:
At the median, 2022 total compensation increased modestly among mid-cap and large-cap companies compared to small-cap companies, where compensation increased slightly more: the small-cap median increased 4.9% from $185,833 to $195,000, the mid-cap median increased by +1.1% from $236,000 to $238,500, and the large-cap median increased +2.0% from $294,167 to $300,000.
Director compensation structure remains consistent with prior years, with an average mix of 60% equity and 40% cash compensation, across the entire sample. Small-cap companies tend to have the highest cash weighting (average of 44%) while large-cap companies tend to have the lowest (average of 36%).
Most companies have continued to simplify cash payments by replacing meetings fees with larger board annual cash retainers (only 8% of the total sample pay meeting fees). Most companies continue to use fixed-value equity award guidelines, with full-value stock awards remaining the most common form of equity compensation and providing the most consistent means to align director pay with shareholder interests. Equity grants most commonly vest immediately, or cliff-vest after one year.
– John Jenkins