This represents Steven Hall & Partners’ 15th annual study of compensation paid to non-employee directors. Our review included 600 companies in the following three groups:
Top 200 – 200 companies with the largest revenues in fiscal 2020
Mid Cap 200 – 200 companies included in the S&P MidCap 400®
Small Cap 200 – 200 companies included in the S&P SmallCap 600®
Total Compensation – One Year Growth
One-year growth calculations only include companies that were a part of our study both this year and last year, which represents:
182 (91%) of Top 200 companies
161 (81%) of Mid Cap 200 companies
184 (92%) of Small Cap 200 companies
Year-over-year median total compensation growth for the five straw positions is displayed below:
Total Compensation – Three-Year Growth
Three-year growth calculations only include companies that were a part of our four most recent studies, which represents:
139 (70%) of Top 200 companies
121 (61%) of Mid Cap 200 companies
142 (71%) of Small Cap 200 companies
For the companies that were included in our last four studies, three-year total compensation growth for the Pro-Forma Director position in each of the three groups is displayed below:
What to expect in 2022
Lower increases in director compensation levels relative to previous years
With the presence of COVID-19 and the uncertainty that surrounds the pandemic, many boards have reduced or frozen director compensation until business and the economy return to normal
Increased use of limits in director compensation plans
Increase in share ownership guideline prevalence and guideline value
Guideline values will increase as both a dollar amount and as a multiple of annual cash retainer reflecting the desire for directors to have significant equity holdings
Things to consider when conducting an annual review of director compensation
Is the current director compensation program competitive with regards to compensation levels and mix of cash and equity?
Does it allow the company to attract and retain high quality director candidates?
Are modifications to the director compensation program sustainable, appropriate and reflective of projected market increases and company growth?
Is the program’s structure aligned with the current best practice of delivering at least half of total value to directors in the form of equity?
How will modifications to the director compensation program affect total board cost?
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