New York, NY, October 20, 2006--Median total compensation for outside (non-employee) directors of U.S. boards is higher than last year's median in all three major industry sectors covered in The Conference Board's annual study of outside director pay. CEO pay is also higher.
The study is based on a survey of the members of the Society of Corporate Secretaries and Governance Professionals and reports on directors' compensation and board practices in 402 companies.
"Demands on board members have increased markedly in recent years, and their compensation is increasing commensurately," says Charles Peck, compensation specialist at The Conference Board, the global business research and membership organization. "In particular, committee service, especially for those serving on audit and compensation committees, has become much more demanding."
In manufacturing, median total compensation for outside directors is now $109,000, up from $91,250 in 2005. The service sector is $106,250 this year, up from $81,875 last year. Financial services increased from $64,500 in 2005 to $83,000. Total compensation includes fees, retainers, committee pay, and all forms of stock compensation.
Median basic annual compensation (the mix of fees and retainers for board service plus committee pay) is up in all three industry sectors. Manufacturing increased from $59,150 to $65,000; financial services increased from $48,000 to $50,300; and services from $57,000 to $60,500.
Median total compensation for U.S. CEOs was higher in all industries in 2005, the latest year for which data is available.
"Annual bonus plans, based on company profitability, generally paid off in 2005," says Peck. "Although somewhat deemphasized recently, stock options are still widely used. Restricted stock grants (full value grants of stock earned out over time) have been gaining in prominence."
Median total CEO compensation (salary, bonus and long-term pay) was highest in the construction industry at $2,604,000. It was lowest in computer services at $848,000. Total current compensation (salary plus bonus) was again highest in construction at $1,936,000 and lowest in computer services at $805,000. The highest median salary, $700,000, was in communications; lowest was computer services, which paid $441,000.
The report is based on data from 3,075 U.S. companies in 14 major industries and reports the compensation paid to the five highest-paid executives.
