Median Total Remuneration Rises to
While pay levels have not changed markedly over the past year, public scrutiny of director pay has. ISS, a prominent shareholder advisory firm, has recently incorporated an assessment of director pay relative to comparators into its influential governance rating methodology. And it’s not just director pay garnering increased focus from outside observers. A range of governance-related items, including concerns about director tenure compromising director independence, long an area of focus in
“Directors should be mindful of the increased attention paid to their compensation and related governance issues,” said
“This increased scrutiny on director issues generally, and director compensation in particular, is likely one of the moderating influences on director pay increases among this group. Additionally, we have observed an increased homogeneity among director compensation programs, as companies seek to avoid the spotlight on these issues,”
A summary of study results is provided below. The complete study will be published in September.
Pay mix for non-employee directors has remained relatively unchanged since 2008. Directors continue to receive just over half of their total compensation in the form of equity (55% in 2013), in accordance with governance best practices.
Annual Board Retainers
Annual cash board retainer increased
Equity compensation is delivered predominantly in full value shares. Only 9% of the Top 200 grant stock options, the lowest level observed since the inception of the
Committee Fees (Retainers plus Meeting Fees)
Committee chairs for each of the Audit, Compensation and Nominating/Governance committees receive additional fees at 98%, 96% and 94% of the companies studied, respectively. Median committee chair fees equaled
Members of the Audit, Compensation and Nominating/Governance committees receive additional fees at 60%, 45% and 41% of the companies studied, respectively. Median committee member fees equaled
Share Ownership Guidelines
Share ownership guidelines continue to rise in prevalence, with 90% of companies disclosing the existence of such guidelines in 2013, up from 74% of companies five years ago. Among those companies with guidelines, 73% are valued at a multiple of five times or greater the cash retainer.
About the Study