2013 S&P 500 Total Board Cost Study

2013 S&P 500 Total Board Cost

January 16 2014

SH&P_2013TBC_CoverSteven Hall & Partners recently completed a study of Total Board Cost among companies listed in the S&P 500 index.  Total Board Cost (“TBC”) equals the sum of directors’ cash, equity, pension value changes, and all other compensation amounts as reported in the director compensation table within the most recent proxy statement.  The study includes all paid directors during a given reporting year, with certain exclusions for fees paid for duties unrelated to board service.

This study serves as a supplement to our eighth annual Director Compensation Study, which was released in September 2013 and focused on individual director compensation amounts.  Analyzing TBC provides companies with another perspective on director compensation as they review and contemplate changes to their current programs.

Among companies in the S&P 500 we found:

  • Median Total Board Cost equaled $2,433,139
  • Median number of paid directors was ten
  • 55% of total director compensation was delivered in equity

Key observations with respect to analyzing the median values of data by study participant revenue, market capitalization and GICS sectors:

  • TBC and Average Cost per Director (“ACD”) were positively correlated with increases in revenue and market capitalization across the studied companies
  • Energy Sector had the highest TBC and ACD among all ten GICS sectors
  • Information Technology Sector delivered the highest percentage of director pay in equity (64%), while the Materials Sector delivered the highest percentage of director pay in cash (47%)

Link to full study: 2013 S&P 500 Total Board Cost Study