The Big Number: $227K
That was the median pay for outside directors at large companies last year.
Corporate directors are literally getting more cash. The 500 largest U.S. companies paid their outside directors a median $227,000 for their board service last year, up 3% from $220,000 in 2011, according to an analysis of proxies through June 30 by consulting firm Towers Watson & Co.
Directors typically receive a mix of equity, cash and fees for attending meetings or serving on a committee. But their pay raise came almost entirely from a jump in cash payments last year, as cash retainers for directors grew 7% at the median to a high of $80,000. Total cash compensation grew to $100,000.
Stock awards didn’t increase at the median last year.
Audit committees have traditionally had the highest-paid directors since the Sarbanes-Oxley Act of 2002 increased their responsibilities and required a greater time commitment. But directors on the compensation committee also saw a jump in pay last year as the 2010 Dodd-Frank Act and its required “say-on-pay” votes have led to more disclosures and meetings with shareholders.
While retainers are rising, companies are shifting away from paying board members for attending their meetings. Only 28% of companies paid meeting fees to directors, down from 32% the prior year.
Boards typically have eight meetings a year, with compensation and audit committees meeting an additional six to nine times a year, according to board consulting firm Frederic W. Cook & Co.
“This is basically a shift in how directors operate,” said Doug Friske, head of executive compensation at Towers Watson. “In the old days a board member got paid for attending each meeting, but in today’s world you’re working all the time.”
Chasan, E. (17 September, 2013). Corporate Directors Get More Cash. The Wall Street Journal. Retrieved from http://blogs.wsj.com/cfo/2013/09/17/corporate-directors-get-more-cash/.