Human Capital & Careers

Director Compensation Up 19 Percent

Companies are also paying extra for individuals who serve on the audit committee.
Stephen TaubJuly 7, 2004

Director compensation at the largest companies climbed 19 percent, to a median $140,350, according to a Towers Perrin analysis published in the consultancy’s newsletter Executive Compensation Resources.

Those figures are for the 469 of the Fortune 500 companies that filed their 2003 proxies by May 28, 2004, compared with the prior year.

For both years, about 40 percent of the pay was in cash and 60 percent in stock. Total cash compensation increased 14 percent at the median; total annual/recurring stock compensation increased 17 percent at the median.

Only 54 percent of companies used stock options in 2003, down from 63 percent the prior year. At the same time, 68 percent of companies awarded at least one type of full-value share to their directors in 2003, up from 63 percent the prior year.

Companies are also paying extra for individuals who serve on the audit committee, recognizing the heightening importance of this role under the Sarbanes-Oxley Act.

The study found that 23 percent of companies pay a retainer for serving on the audit committee; only 14 percent pay a retainer for service on other committees. In addition, 62 percent of companies that pay retainers also pay directors more to serve on the audit committee than other committees.

The average retainer for audit committee service was $11,783, compared with $6,405 for service on other committees.