The median director pay among Fortune 500 companies last year rose to $140,350, according to a new study by Towers Perrin.
For both years, companies paid 40 percent of a director’s total pay in cash, with 60 percent coming from stock.
The study suggests that more companies are paying additional fees to lead directors, and audit committee members are also seeing higher pay. 23 percent of the companies studied pay retainers for audit committee service, while only 14 percent pay retainers for service on other committees.
In addition, the Towers-Perrin study verifies previous reports in Compliance Week that companies are increasingly replacing stock options with restricted stock. According to the study 54 percent of the companies studied used stock options to compensate their directors in 2003, down from 63 percent in 2002.
And while governance experts—such as Richard Breeden in his 2003 “Restoring Trust” report—have suggested that companies eliminate meeting fees and just pay a single flat fee retainer, Towers Perrin’s study suggests companies are not heeding that advice. Only 6 percent of companies eliminated meeting fees in favor of a single cash retainer in 2003.
The report also indicates that more companies are requiring directors to have a stake in the company, as 35 percent of them disclosed the existence of stock ownership guidelines. Only 19 percent reported that requirement in 2002.
The complete study is available in the box above, right.
No comments yet