Pay for US Board Members Hits $250,000
That’s according to research by Towers Watson, which reviewed data from 470 companies that filed 2014 proxy statements before June 30th 2015.
Total compensation for outside directors rose 4% at the median over the previous year, from $240,000 to $250,000. Fifty-six per cent of that amount comes from stock compensation, and 44% is cash.
One expert on corporate governance said the pay increases are fair, given that boards are moving to a more advisory role.
“The time involvement, the risk, the expectations – they are all considerably higher now,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “The board has always been a monitor, but there’s a lot more to monitor, and expectations from investors of that monitoring have gone up.”
The median value of cash compensation remained flat at $100,000 for the second year in a row, Towers Watson said. Stock compensation value rose 7% at the median, to almost $140,000, after increasing 4% in 2013.
Director pay is highest in the health-care sector, with median compensation of $285,785. Pay for board members in the energy sector is next at a median of $279,548. The lowest-paying sector, utilities, has median pay of $228,329. The information technology sector has the highest percentage of director pay based on equity (66%), followed by health care (60%).
Twenty-seven per cent of companies that adopted or amended stock plans that include directors as participants also included a director-specific stock award limit, up from 22% that adopted such limits in the 2014 proxy season.
Paul Conley, US West division leader for Executive Compensation at Towers Watson, said in a news release that companies are continuing to simplify director pay programmes by cutting back on per-meeting pay and going to a higher cash retainer for board service. “Companies are paying for directors’ overall contributions as opposed to paying for the time they devote to the role,” he said.
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