Board of Directors’ Pay Up from Last Year

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Even though the U.S. economy is still showing mixed signals on economic recovery, pay for the Board of Directors increased compared to last year according to a study published by Total Compensation Solutions (TCS). Increases in average total cash compensation ranged from 2.5% for Regular Board Members to 15.4% for Lead Directors.

Board of Directors Compensation Survey 2012 / 2013 by Total Compensation Solutions

Increases in average total cash compensation ranged from 2.5% for regular board members to 15.4% for Lead Directors

Even though the U.S. economy is still showing mixed signals on economic recovery, pay for the Board of Directors increased compared to last year according to a study published by Total Compensation Solutions (TCS). Increases in average total cash compensation ranged from 2.5% for Regular Board Members to 15.4% for Lead Directors.

Board compensation was basically flat last year so this upward movement is perceived to be another sign that the economy is recovering. Before the recession, pay for Directors had been increasing at a rate of approximately 15% per year (on average) for at least ten years. This was considered reasonable as Board member responsibilities and time commitment increased. Over the last four years, TCS had seen only modest increases in board compensation even though board members have been under greater scrutiny since the recession started.

The 2012/2013 Board of Directors’ Compensation Report explores how companies continue to respond to current economic conditions. This survey compiles data from 512 U.S. Corporations in 11 industry groups (Banking, Biotechnology, Chemical, Consumer Goods, Energy, Financial, Healthcare, Insurance, Leisure, Media & Technology). In addition to cash compensation, the TCS survey also reports board stock compensation (including initial stock grants), board structure (including number of directors and meetings), committee structure and governance policies.

TCS observed marginal increases in annual retainers for regular board members and Chairs and significant increases for the Lead Director. At the same time, the study shows decreases in per meeting fees. This directly impacts the total cash compensation paid to Directors which TCS defines as the sum of annual retainer and per meeting fees. This is considered a significant trend since many companies are putting greater emphasis on retainer rather than per meeting fees as an effective means of compensating their Directors.

Some additional points of interest the study reports are:

  • Average total cash compensation for non-employee Chairman of the Board grew by 8.7% in the past year.
  • Average total cash compensation for Lead Director was comparable to the Chairman at $86,443 and
  • Phone/virtual attendance meeting fees are on average approximately half to two-thirds of in person meeting fees.

Copies of the 2012 / 2013 Board of Director’ Compensation Report are available from TCS (http://www.total-comp.com). If you have questions regarding this report, please call TCS at (914) 730-7300 or email questions to: Tom Bailey tbailey(at)total-comp(dot)com or Paul Gavejian pgavejian(at)total-comp(dot)com.

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Total Compensation Solutions is an independent human resources consulting firm that assists clients in achieving their strategic compensation objectives. The firm uses market data to identify best practices in a variety of topical areas including: board compensation; executive, middle management and staff compensation; performance management; organization structure; health and welfare; and retirement benefits. From offices in Armonk, NY, and Philadelphia, TCS gathers and reports information on compensation, personnel practices and benefits and applies the most effective, market-driven solution to each organization’s unique set of circumstances. TCS provides comprehensive compensation consulting services to organizations in a variety of industries.

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Thomas Bailey
Total Compensation Solutions
(914) 730-7300
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