Director pay is on the rise despite recent backlash from the public and shareholder scrutiny. Companies are factoring in increased time commitments and liabilities directors face in a troubled economy. From 2007 to 2008, median board-level compensation for non-employee directors at Fortune 500 companies increased by 4.7 percent, according to recent report by Equilar on executive compensation trends.
However, in comparison to other years, the rate at which board fees are growing has slowed. In 2008, median board-level compensation reached $182,102, up from $173,876 in 2007. A comparable analysis by Equilar last year found that director compensation grew 7.2 percent from 2006 to 2007.
Three primary components of board-level compensation include annual cash retainers, annual equity awards, and board meeting fees.
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Cash Retainers The median value of board member retainers paid in cash rose by 6.7 percent from $60,000 in 2007 to $64,000 in 2008. The number of companies with no cash retainers continued to shrink: only 3.7 percent of companies awarded no cash retainers in 2008.
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Equity Awards From 2007 to 2008, the median value of annual equity grants for directors rose by 5 percent, from $101,529 in 2007 to $106,601 in 2008. Equity awards also became nearly as prevalent as cash retainers in 2008, with 96 percent of Fortune 500 companies providing some form of annual equity award.
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Board Meeting Fees Among companies with meeting fees, the median value of aggregate board meeting fees for the year was $16,500 in 2008. Though this represents a 10.0 percent increase in median value over 2007, the prevalence of companies awarding meeting fees continued to fall. In 2008, only 44.3 percent of companies paid board meeting fees, down from 50.0 percent in 2007. Aggregate board meeting fees are calculated by multiplying the meeting fee by the disclosed number of board meetings.