2013 Director Compensation Study Summary

2013 Director Compensation Study Summary

July 10 2013

Steven Hall & Partners recently completed its eighth annual study of compensation paid to non-employee directors at the 200 largest U.S. public companies (based on revenues).  Our findings for 2012 are presented below.  To provide context for this information, and to facilitate comparisons over one-, three- and five-year periods, we have also presented data for prior years.

  • Total compensation paid to non-employee directors rose +4.5% over 2011 levels, to a median of $261,333.

Total Remun

  • Pay mix for non-employee directors has remained relatively unchanged since 2007.  Directors continue to receive just over half of their total compensation in the form of equity (55% in 2012), in accordance with governance best practices.

Pay Mix

  • Annual Cash Board Retainer increased $5,000 in 2012 to a median of $85,000 and the median Annual Equity Board Retainer increased $10,000 to $140,000

Board Retainers

  • Equity compensation is delivered predominantly in full value shares while the prevalence of options continues to sink, reaching the lowest level observed over the last five years.

Equity Mix

  • Equity vesting periods remain largely unchanged over the last five years, with the majority of awards vesting either immediately or within one year of the grant date.  There has been a slight decrease in the use of multi-year vesting periods in favor of one-year vesting.  The percentage of grants vesting immediately, typically common stock or shares deferred until retirement, has remained unchanged over the last five years.

Equity Vesting

  • Meeting fees continue to decline in prevalence for both board and committee service, to 27% and 29% respectively, as companies seek greater control over total compensation levels and replace these fees with increases in retainers.  Among those still paying meeting fees, the median per meeting fee was $2,000 for both board and committee service.
  • Committee chairs for the Audit, Compensation and Nominating/Governance committees receive additional fees (retainers plus meeting fees) at 94% of the companies studied.  Median committee chair fees equaled $25,000, $20,000 and $15,000 for the Audit, Compensation and Nominating/Governance committees, respectively.
  • Committee Members for the Audit, Compensation and Nominating/Governance committees receive additional fees (retainer plus meeting fees) at 41% of the companies studied.  Median committee member fees equaled $15,000, $10,000 and $8,000 for the Audit, Compensation and Nominating/Governance committees, respectively.
  • Share ownership guidelines continue to rise in prevalence, with 91% of companies disclosing the existence of such guidelines in 2012 versus just 63% of companies in 2007.  Among those companies with guidelines in 2012, 59% are valued at a multiple of five times or greater the cash retainer.

Cover

About the Study
The study analyzed non-employee director compensation data as disclosed in the most recent proxy statements filed for the 200 largest U.S. public companies, ranked by revenues.  Analysis of total remuneration is based on pay for an average director, defined as a director who chairs one committee and serves as a member of another; in each case, committee fees reflect the average for the Audit, Compensation and Nominating/Governance committees.

The complete study will be available in September 2013 on www.shallpartners.com.  To receive a printed copy of the study please contact Steven Hall Jr. at 212-488-5400 or sehall@shallpartners.com.