Employee salary differences

Board Compensation Edges Up

Sept. 11, 2012
Pay loses some luster as a differentiating factor in attracting talent.

You might be surprised at the comparatively small difference in direct compensation received by directors at the top U.S. companies, despite what can be huge differences among the firms’ annual revenues.

That's one of the findings in Hay Group's 2012 Director Compensation & Benefits Survey, which examined compensation and benefits packages for directors at the 300 largest companies that filed proxy statements between May 1, 2011, and April 30, 2012.

See Also: Manufacturing Workforce Management Best Practices

Median direct compensation for directors at companies with annual revenues of more than $40 billion was $252,500 in 2011, compared with $209,000 for directors at companies with revenues under $10 billion. Those reflect increases of about 6% and 5%, respectively, over the previous year.

The overall median, regardless of company size, was $227,250.

"There's a minimum price to compensate directors for their increased exposure and complexity in this environment, independent of the size of the company," says Irv Becker, Hay Group's national practice leader of its U.S. Executive Compensation Practice.

With the lack of significant pay differentiation, he adds, "it’s going to become more critical for organizations to create and maintain positive boardroom cultures with strong values."

In other findings:

Fewer companies are granting stock options, decreasing from 23% to 17%.

The percentage of firms granting restricted stock and restricted stock units inched up from 71% to 73%.

Some 31% of organizations paid board meeting fees in 2011, with a median fee of $2,000.

Nearly all of the companies (94%) paid audit committee chairs a retainer fee for annual service, with the median fee coming in at $20,000. At 39%, far fewer paid audit committee members a retainer fee.

About the Author

Jill Jusko

Bio: Jill Jusko is executive editor for IndustryWeek. She has been writing about manufacturing operations leadership for more than 20 years. Her coverage spotlights companies that are in pursuit of world-class results in quality, productivity, cost and other benchmarks by implementing the latest continuous improvement and lean/Six-Sigma strategies. Jill also coordinates IndustryWeek’s Best Plants Awards Program, which annually salutes the leading manufacturing facilities in North America. 

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