Cooling Business Climate Chills Director Compensation

Compiled ByDeborah Austin Declining stocks dampened long-term director compensation in fiscal 2001, suggests the 2003 Guide to Board Compensation by Executive Compensation Advisory Services (ECAS), Alexandria, Va., provider of executive compensation intelligence. The study of 250 major U.S.-based firms assists companies formulating upcoming board compensation policies. In annual compensation, directors gleaned a 2% increase to average $57,028 -- with cash retainer jumping 5.4% to $31,684 -- but total compensation slipped 1.8% to $130,542. Annual compensation includes cash retainers, meeting fees and stock grants vesting in one year or less. Total compensation adds long-term equity awards like stock options and deferred stock. In fiscal 2001, the stock portion of director compensation programs decreased to 65% while the cash compensation portion climbed to 35% -- reversing a trend spawned in the 1990s with the pay-for-performance surge. In 1994 the stock proportion of director compensation was 36%; 1998, 54%; and 2000, 67%, says the study. The most-recent ratio reflects declining stock values, says David Haase, ECAS director of publications.