New York, NY, November 9, 2005--Median total compensation for outside (non-employee) directors of U.S. boards is higher than last year's median in two out of three major industry sectors covered in The Conference Board’s annual study of outside director pay.
The study, conducted jointly with the Society of Corporate Secretaries and Governance Professionals, is based on a survey of directors’ compensation and board practices in 425 companies.
"The oversight role of corporate boards is intensifying, resulting in significantly higher demands on board members," says Charles Peck, compensation specialist at The Conference Board, the global business research and membership organization. "The chairmen of audit committees are especially under rising new pressures. These increased demands account for the higher retainers paid to audit committee chairmen than to other committee chairmen."
In manufacturing, median total compensation for outside directors is now $91,250, up from $72,750 in 2004. The service sector is $81,875 this year, up from $70,000 last year. Financial services is slightly lower this year: $64,500 compared with $67,000 in 2004. 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 $50,000 to $59,150; financial services increased from $43,750 to $48,000; and services from $50,000 to $57,000.
Median total compensation for U.S. CEOs was higher in all industries in 2004, the latest year for which data is available.
"Profit performance was generally good in 2004," says Peck. "As a result, annual bonus plans, which are usually based on profitability, paid off well in many cases."
Stock option grants, which provided riches to many during the 1990s, have decreased in size over the last several years. However, restricted stock grants have been getting larger, indicating a shift in company stock compensation practices.
Total CEO compensation (salary, bonus and long-term pay) was highest in the construction industry at $2,836,000. It was lowest in transportation at $803,000. Total current compensation (salary plus bonus) was again highest in construction at $2,032,000 and lowest in transportation at $673,000. Construction also paid the highest median salary, $730,000. Lowest was computer services, which paid $430,000.
The report is based on data from 3,143 U.S. companies in 14 major industries and reports the compensation paid to the five highest-paid executives.
