Total compensation paid to outside directors in the Fortune 250 increased by 7% in the past year, according a press release from WorldatWork. Board pay structure also continues evolving across all public organizations, with the largest public companies continuing to shift toward a greater emphasis on fixed cash retainers and restricted stock/RSU grants and away from per-meeting-based compensation and stock options.
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Get Your Report Now!These findings, from Meridian Compensation Partners, an executive compensation and corporate governance consulting firm, are based on a study of proxy statements filed in 2011.
For the study, total outside director compensation included annual retainer (cash and/or equity), average board meeting fees per director, average committee fees per director (including additional retainers and meeting fees), and non-retainer equity.
The median total compensation for companies in the Fortune 100 and Fortune 250 was $248,183 and $231,042, respectively. While median total retainer compensation rose 10% in the past year among the Fortune 250, committee fees decreased by 11%. Nonretainer equity increased 8% from last year's levels.
"In addition to moderate pay-level increases, many large public companies made structural changes in an effort to simplify the way they compensate their directors," said Gerard Leider, partner at Meridian. "Stability and stock ownership seem to be the driving factors when determining compensation structure as companies have shifted towards using full-value share awards and away from more volatile stock options."
The study also found there is not much difference between director pay designs between the Fortune 100 and Fortune 250. In fact, the portions paid in equity are nearly identical: The Fortune 100 delivers 46% of total compensation to directors through equity, compared to 47% for the Fortune 250. Only 15% of the Fortune 100 reported using stock options to deliver equity to directors, down from 29% just 3 years ago. The median additional retainer paid to audit and compensation committee chairmen for the Fortune 250 were $20,000 and $12,500, respectively, while the median additional retainer paid to lead directors was $25,000.