Median total director compensation at Fortune 500 firms increased six percent in 2010, from $200,698 in 2009 to $212,512 in 2010, finds a new Towers Watson analysis released today. Although directors received nearly 10 percent in compensation raises annually prior to the financial crisis, this is a marked increase from 2009′s one percent increase.
Towers Watson’s report links the compensation bump to the increase in the value of equity awards, which have been growing since 2006. The equity award values increased nine percent in 2010, and made up 54 percent of director pay, with the other 46 percent in cash. The cash compensation values also increased, by 5 percent, to an average of $89,000.
“Similar to executive pay trends, director pay levels increased in 2010, consistent with improved financial and stock performance,” said Doug Friske, global head of executive compensation consulting at the professional services company, in a statement on the findings. “These changes also reflect increased demands placed on outside directors in terms of the time commitment as well as the level of debate, discourse and discord among directors. The question is whether this trend can continue, given growing uncertainty around the sustainability of the recovery.”
In addition, more of the 464 publicly owned companies surveyed are eliminating board and committee meeting fees, opting to compensate directors with fixed service retainers instead. Only 36 percent of companies paid meeting fees in 2010, down from 40 percent in 2009 and 62 percent in 2004.
Of the 39 percent of companies with the chairman and CEO roles separated, nonexecutive board chairs received an average of $150,000 more in compensation than the average director.