The Advisors' Blog

WTW recently released the results of its annual S&P 500 director compensation analysis comparing year-over-year changes. Here are key findings from the summary:

– Total direct compensation (TDC) rose 2% (from $300,000 to $305,000).

– The median annual cash retainer remains at $100,000. Board and committee meeting fee prevalence continues to whittle down, reaching 3% and 4%, respectively (each down one percentage point from the prior year). As was the case with annual retainers, the median value of most individual cash components remained the same as the prior year, with the exception of additional committee chair retainers, which leapt 14% (from $17,500 to $20,000). This helped push total cash compensation up 5% (from $110,000 to $115,000).

– The median value of annual equity grants increased 3% (from $180,000 to $185,000). Stock option prevalence (8%) and median value ($99,894) were unchanged from the prior year. The prevalence of common stock remained the same (14%), while deferred and phantom stock rose one percentage point to 18% and restricted stock dropped one percentage point to 67%. The median value rose 5% for common stock (from $166,258 to $175,000), 4% for deferred and phantom stock (from $170,000 to $177,002), and 3% for restricted stock (from $175,055 to $180,004). One-time initial stock grants decreased one percentage point to 8%, as the value at the median fell 10% from $200,000 to $180,912.

– Additional pay for the lead director remained $40,000 at the median, while non-executive chair of the board compensation once again outpaced TDC by increasing 5% at the median (from $165,000 to $172,543).

The summary notes that program changes have focused on the compensation of committee chairs:

With two years of significant leaps in the value of additional committee chair retainers (17% in 2022 and 14% in 2023), companies are increasing efforts to make sure committee leadership is adequately compensated. These changes seem to indicate acute interest in making sure that directors in leadership roles on the committees are paid for their expertise in roles with higher expectations of performance.

Check out our “Director Compensation Practices” page for additional resources on director pay programs.

– Meredith Ervine