Director Pay Continues to Climb

Director compensation continues to rise, bolstered in part by the increasing responsibilities they’re taking on, according to a new study.

Korn Ferry Hay Group’s seventh annual director compensation study found that the range of compensation was from $265,000 to $280,000, but now it has jumped from $275,000 to $295,000. The study, which included data from May 1, 2016 to April 30, 2017, reviewed 300 large companies with revenues of more than $9 billions.

“It’s not surprising that we're seeing director compensation increases,” said Irv Becker, Senior Client Partner and North American leader for Korn Ferry Hay Group’s Executive Pay & Governance practice. “This rise reflects increased board responsibilities and time commitments, and the greater pressures members face from investors and governance watchdogs.”

The study also found:

·      Median annual retainer remains unchanged after increasing from $90,000 to $100,000 in 2014.

·      78% of companies reward their board directors with restricted stock.

·      Stock option grants declined from 8% in 2015 to 7% in 2016.

·      Most companies pay extra retainers to their committee chairs. 97% of companies paid $25,000 to their audit committee chair, 95% paid $20,000 to their compensation committee chair, and 92% paid $15,000 to their nominating committee chair.

·      The lead director premiums remain unchanged at $30,000, and 64% of companies are paying their lead director premium in 2017.

·      The percentage of companies paying a retainer for audit committee members ticked upward to 43 percent, while the median retainer increased from $12,000 to $15,000.

·      Twenty-eight percent of companies paid a compensation committee member a median retainer of $10,000, which is unchanged since last year. Companies were least likely to offer retainers to members of their nominating committees, with only 26 percent saying they do so, with a median retainer of $10,000, which is the same as last year.