After years of double digit growth in director’s pay, increases are beginning to moderate. Directors at the largest companies pocketed 5 percent more in 2007, compared to raises of 12 percent in 2006 and 11 percent in 2005, according to a recent study by the National Association of Corporate Directors (NACD).
In 2007, directors at companies in the top 200, by size, took home $215,000 in total direct pay on average, up from $204,975 in 2006. A smaller company director’s total direct compensation (TDC) averaged about $73,332 as opposed to $79,165 in 2007.
The use of stock options as compensation has also decreased as equity and full-value rewards have seen an upturn. The board pay mix offers a clearer idea as to how compensation options are broken down. A smaller company with an annual revenue of under $500 million a year averaged a total median TDC of $81,951. Of that, 30 percent consisted of the board cash retainer, 7 percent board meeting fees, 11 percent committee pay, 27 percent full-stock value, and 25 percent in stock options.
A medium company with annual revenue between $500 million and $1 billion averaged a TDC of $114,000. A large company with an annual revenue between $2.5 and $10.0 billion averaged a TDC of $156,818. The pay mix was 29 percent cash retainer, 6 percent in meeting fees, 10 percent in committee pay, and 36 percent in full-stock value, and 19 percent in options.
Overall, Audit members receive the highest committee service pay ranging from $13,375 at smaller companies to $25,000 at top 200 companies. Compensation members net and extra $7,200 to $15,000 and Governance/Nominating members make $5,000 to $14,000.
The Prevalence of Perquisites/Benefits differed according to company size, as do disclosure habits. Eleven percent of smaller companies disclosed perquisites, 39 percent of large companies do, and 67 percent of the Top 200 reveal the data. The prevalence of such perks is expected to decline as the NACD and other experts recommend that such benefits not be made available to directors.