Corporate director median total compensation reached its highest level ever, amounting to $225,235 in 2013, up 5% from the previous year, according to a study by Steven Hall & Partners, an executive compensation consulting firm.
“The increase in pay is primarily attributable to an increase in equity compensation, which now represents 55% of total compensation paid to directors,” Joseph Sorrentino, managing director, SH&P, said in a statement about the study. “This is in line with governance best practices that recommend at least half of director pay be in the form of company stock.”
A median equity award of $120,000 and cash retainer of $67,500 made up the bulk of the total compensation, the study found.
The rest of the compensation comprised committee retainers and meeting fees.
Director total pay in the study ranged from $86,892 to $402,150.
Total board cost was a median $1.9 million for each company, the study found.
Nearly all the companies, or 96%, grant shares of stock to directors, the study said.
“It’s preferable for directors to be outright owners of company stock, rather than (awarded options on stock) since their role is to focus on the needs of long-term shareholders,” Michael Sherry, consultant at SH&P, said in the statement. “This rationale also helps to explain why so few companies award performance-based pay to directors.”
Some 31% of companies in the study pay fees for attendance at general board meetings, the study said.
“Meeting fees make sense for some companies,” Mr. Sorrentino said. “In particular, companies with unpredictable or inconsistent workloads and meeting schedules need the flexibility that meeting fees provide. It allows for pay to be more directly correlated to the amount of time expended by directors.”
Perquisites totaled less than $800 per director, the study found,
The study analyzed proxy statement data for the most recent two years of the 100 companies with revenues greater than $1 billion that were the earliest to file their disclosures.