Directors' Pay: The Envelope Please

Executive pay experts Steven Hall & Partners in February will release the latest trends in director compensation, based on interviews with 850-plus companies in the Fortune 1,000. The results uphold classic economic theory: Experienced board members are harder to find, and the job has grown more difficult, so pay is on the rise. Median total compensation for directors at the 500 biggest companies in the study grew by 14 percent in the past year, to $185,000.

Some of the increase was due to higher pay for committee members and chairs, who shoulder the heaviest burdens. Median total compensation for audit committee chairs hit $194,723, up 17 percent. Chairmen of compensation and nominating governance committees made around $185,000.

Nearly all (95 percent) of the companies still give their board members equity. But the preference for full-value stock awards is growing. Only about half of the companies in the study award options, vs. 72 percent awarding full-value shares. Overall, the median equity award for directors at all companies is a little over $87,000. Increasingly, companies are abandoning the practice of paying meeting fees. But cash and equity retainers are 38 percent larger at companies that don’t pay meeting fees than at those that do (the median board meeting fee is $1,500). As a result, median total pay for directors is 11 percent higher at companies that don’t pay meeting fees.

The survey includes some demographic tidbits, too. For example, the typical board meets seven times a year and is made up of 10 directors, eight of them independent.