Total Board Compensation Increased +4% Among Early Proxy Filers

Total Board Compensation Increased +4% Among Early Proxy Filers

April 14 2016

Total compensation paid to the Board of Directors increased +4% in 2015, to $2.1 million, while target CEO compensation for the group increased +7% over the same time period.  The findings 2016_DirEF_1are based on our recent study of 100 companies with revenues greater than $1 billion filing proxies since January 1, 2016.

Among the 100 early filers, total board compensation ranged from $386,570 to $5,111,325 with the median equaling $2.1 million.  The +4% increase in total compensation is due to increases in both cash and equity compensation.  Equity award values increased +5% in 2015 to a median value of $1.2 million, while cash compensation increased +4% to a median value of $820,000.

In 2015, total board compensation increased at 64 companies and decreased at the remaining 36 companies.  The majority of decreases were due to reductions in the value of equity compensation, not a decrease in number of paid directors.

Median total board compensation ranged from $1.8 million among industrial companies to $2.6 million for health care companies.  While industrial companies were the lowest paying in 2015, they experienced the greatest one-year increase in total compensation (+7%), followed by materials companies (+5%).

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Number of Paid Directors
Early proxy filers had between five and 15 paid directors on the board in 2015.  The median equaled nine; no change from 2014.  In 2015, 39 of the 100 early filers increased the number of paid directors on the board, by between one and three new directors, while 21 companies decreased the number of paid directors, ranging from one to three fewer directors.  There was no change in paid directors at 40 companies.

Total Compensation per Director
Total compensation per director in 2015 ranged from $77,314 to $575,557 among the companies studied. The median equaled $230,112, representing a +1% increase from 2014 levels.  Total compensation per director was highest among information technology companies ($296,596) and lowest among industrial companies ($209,377).

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Pay Mix
The majority of director compensation paid in 2015 was delivered via equity awards (56%), followed by cash payments (42%) and all other compensation (2%).  All other compensation includes items such as charitable contributions, dividend equivalent payments and other perquisites granted to directors of the board.  Information technology companies paid the highest percentage of compensation in equity and utilities paid the highest percentage in cash.

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Early Filer Companies
The 100 companies included in the study represent nine different industries, with Industrials (26) and Information Technology (21) companies being the most represented.  Fiscal 2015 revenues for the group ranged from $1.1 billion to $233.7 billion with a median value of $3.1 billion.  Fiscal year ends range from July 31 to December 31, with September 30 being the most common (48).

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About the Study
The study analyzed compensation data for the most recent two years as disclosed in 100 proxy statements filed in 2016 for companies with revenues greater than $1 billion.  For additional details regarding the study please contact Steven Hall Jr. at 212-488-5400 or sehall@shallpartners.com.

About Steven Hall & Partners
Steven Hall & Partners is an independent executive compensation consulting firm serving as outside counsel to boards, compensation committees and management.  The firm focuses solely on executive compensation, director remuneration and related corporate governance matters.