2012 Director Compensation Study | Steven Hall & Partners

2012 Director Compensation Study

October 11 2012

Steven Hall & Partners recently completed the seventh annual study of compensation paid to non-employee directors at the 200 largest companies in the United States.  Based on this study, we find that in 2011:

  • Total compensation paid to non-employee directors rose +4% over 2010 levels, to a median of $250,000.  This increase exceeds the average merit increases of 3% for executives over the same period.
  • Equity compensation is delivered predominantly in full value shares while the prevalence of options continues to sink, reaching the lowest level observed since the inception of the Steven Hall & Partners study.
  • Equity vesting periods continue to be short, with the majority of awards vesting either immediately or within one year of the grant date.
  • Meeting fees continue to decline in prevalence for both board and committee service, to 31% and 34% respectively, as companies seek greater control over total compensation levels and replace these fees with increases in retainers.  For both board and committee service, the median per meeting fee was $2,000.
  • Committee chairs for each the Audit, Compensation and Nominating/Governance committees receive additional fees at 95% of the companies studied.  Only 1% of the companies studied did not pay additional fees, the remainder paid at least one committee chair additional fees.  The value of additional chair fees has remained largely unchanged over the past five years.
  • Median Committee chair retainers for the Audit, Compensation and Nominating/Governance equaled $20,000, $15,000 and $12,500, respectively.
  • Committee Members for each the Audit, Compensation and Nominating/Governance committees receive additional fees at 46% of the companies studied39% of the companies studied did not pay any additional fees to committee members, the remainder paid additional fees to members of at least one committee.  The value of additional member fees has remained unchanged over the past five years.
  • Pay mix for non-employee directors has remained relatively unchanged since 2006. Directors continue to receive just over half of their total compensation in the form of equity (53% in 2011), in accordance with governance best practices.
  • Board leadership structures include an independent leader, in the form of an independent chair and/or a lead or presiding director, at 97% of companies studied.  Lead/presiding directors are found at 83% of companies studied.
  • Share ownership guidelines continue to rise in prevalence, with 89% of companies disclosing the existence of such guidelines in 2011.  Among those companies with guidelines, 55% are valued at a multiple of five times or greater the cash retainer.

PDF: 2012 SH&P Director Compensation Study