Director Compensation Report
The State of Director Compensation
Compensation of nonemployee directors is a critical element in the overall governance of any company. Well-designed compensation not only helps to align the interests of shareholders and directors but also provides value to directors for value received. The 2018–2019 Director Compensation Report, produced in collaboration with Pearl Meyer, offers insights into compensation trends and changes based on data from 1,400 public companies in 24 industries.
Director Pay Remains in a Steady StateTotal director compensation levels have seen only modest growth: up 2 percent over the prior year across all firms (down from last year’s 4 percent increase). It is expected that director pay will continue to remain relatively flat, as boards typically only implement pay increases every two to three years.
Year-Over-Year Total Direct Compensation Trends
Company Size Does Not Play a Role in Board Pay MixAll size groups use a similar mix of cash and equity pay elements, including board cash retainers and meeting fees, committee retainers and meeting fees, and equity compensation delivered in full-value stock and/or stock options.
Median Total Director Compensation by Company Size
Committee Specific Pay Continues to Decrease in PrevalenceWhile committee member pay continues to play a role, only 75 percent of all firms had differentiated pay for being on a committee, compared to 85 percent last year. For Top 200 companies, the prevalence of compensation for serving as a member of the compensation committee or the nominating/governance committee remains less than 50 percent, resulting in median compensation for a member of these two committees of $0. This existing trend has been prevalent for many years among large firms, and is expected to continue within smaller organizations as companies continue to review and refine their director pay programs.
Median Total Compensation (Retainer and Meeting Fees) for Committee Members
About NACD's Director Compensation Report
NACD works with Pearl Meyer annually to report on nonemployee director compensation. Together we analyze proxy statements, SEC filings, and other data to deliver insights on the state of board compensation for public companies from a wide range of industries. A related publication, the Director Compensation: Summary Statistics, is available from Pearl Meyer and provides additional data on director compensation by industry and company size. For further information or compensation consultation, please contact Jannice Koors, managing director at Pearl Meyer, by emailing firstname.lastname@example.org.