A new study by accounting and consulting firm BDO found that director pay at midmarket companies rose 2% last year to an average of $110,500, a small increase reflecting the stagnant state of the economy. Of the 600 companies in eight industries studied, technology firms were the most generous with their boards, paying directors an average of $174,950 annually.
The retail sector gave board members a significant raise, as average director compensation in the beleaguered industry jumped a surprising 14%. Randy Ramirez, northeast leader of the compensation and benefits practice at BDO, says the boost came largely from improved performance in retail stocks, which have rebounded of late from their recession lows. Technology and health-care directors also saw larger-than-average gains, with pay increases of 6% and 5.6%, respectively.
“When you look at what makes up the mix of director pay, you can see that a lot of the gains were linked to the equity portion of the compensation package,” says Ramirez. However, cash retainer fees also rose slightly this year, the study noted.
Companies at the smaller end of the midmarket, a segment BDO defines as companies with $25 million to
$1 billion in annual revenue, were willing to pay up for board talent, shelling out nearly as much as their larger competitors. “The smaller companies are being just as aggressive as companies on the upper end of the spectrum,” says Ramirez. “You’re seeing a $200 million company saying, ‘We want a board member that could be at a $1 billion company, because we’re going to be that size one day.’”