In Director Pay, One Size Fits Many

Company size has minimal effect on the level of director compensation, Hay Group survey shows.

Pay for directors at U.S. companies rose only slightly last year, and the level of director pay was little affected by the size of the company. A survey of 300 large companies by consultancy Hay Group found median director pay rose to $227,250 in 2011, up 6% from $213,774 in 2010.

According to Hay Group, the median pay for directors at largest of the companies surveyed—those with annual revenue of more than $40 billion—was only 21% higher than that for directors at the smallest companies—those with revenue of less than $10 billion. The median pay for directors at the largest companies was $252,500 last year, up 6% from 238,100 in 2010, while the median for those at the smallest companies was 209,000, up 5% from $200,000.

Just 31% of companies paid board meeting fees in 2011, down from 35% in 2010, and only 35% of companies paid directors to attend audit or compensation committee meetings. Becker notes that showing up at meetings is just a “minimum expectation” of the job. Eliminating fees for board meetings also does away with worrying about whether to classify a certain discussion as a meeting. “They’re getting a retainer and if you want to have 10 board meetings or 20 board meetings, it’s not going to matter.”

Whether a company pays fees for committee meetings has more to do with each company’s circumstances. “If a board has certain committees that really do work much harder than other committees, and the board is a larger board where they have different people sitting on each committee, those types of companies tend to retain the meeting fees,” Becker says. He also notes that eliminating committee fees is a trend that started at the biggest companies. “At midsize companies, we still see a lot of companies using committee meeting fees.”

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