In the face of an economic downturn that continues to vex executives and directors worldwide, director pay continues to rise, according to two studies released yesterday. A study conducted by Mercer found that director compensation rose 4.2 percent in 2007 for Mercer’s top 50 companies to $236,147. A separate study by Steven Hall & Partners found that director pay had risen 22 percent between 2004 and 2007.
The increase in director pay is perhaps a prolonged result of the increased responsibilities and liabilities that came about due to the corporate scandals and regulator changes that redefined the business landscape in the first half of the decade. “Director pay has increased each year to reflect the growing demands and risks of serving…in today’s complex business and governance environment,” said Diane Doubleday, global leader of Mercer’s executive remuneration services.
The Mercer study also found that stock options are becoming less of a component to a director’s pay package, with other equity vehicles such as restricted stock gaining prominence. For Mercer’s top 50 companies, stock options accounted for only 9 percent of a given director’s equity package, down from 13 percent the previous year. Mercer also found that board meeting fees are on the decline—from 42 percent of a director’s pay package in 2005 to 36 percent last year.
Results from the Steven Hall & Partners study showed that the average director at their top 250 earned $238,000 annually, a couple of thousand dollars more than what Mercer determined. In terms of wages to hours, the average director makes more than $1,000 hourly.