Companies Reevaluating Board Compensation

Sibson Consulting has found that two-thirds of the 69 companies it surveyed recently plan to change how they compensate board members. One half of survey participants will change their board packages for regular board service. Most popular in this category was increasing retainers and changing the cash/equity mix of compensation. Regarding committee service, 55% said they plan to change audit committee pay. Sibson recommends that companies focus on the total set of rewards-versus-costs for directors and work toward achieving a balanced "director value proposition." This might include:

  • Improve governance practices in ways that will both improve directors' rewards and potentially reduce the risks of directorship.
  • Compensate directors fairly and competitively.
  • Consider providing business-based benefits that support the board's role such as board retreats that focus on team building and discussions about key business issues.
  • Require stock ownership and review the type of equity granted.
  • Pay more to board members who assume greater responsibility.
Sibson Consulting, the human capital division of The Segal Co., is based in New York.
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