2020–2021 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 2020–2021 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.
Total Direct Compensation
Across firms of all sizes, the percentage of companies delivering more than 50 percent of their total director pay in equity continues to increase, with small companies ($500 million to $1 billion in revenue) and medium companies ($1 billion to $2.5 billion in revenue) experiencing the largest increases at 4 percent and 3 percent, respectively, over the past three years.
Equity Grant Practices
In 2020, the prevalence of fixed-value awards increased slightly across all size categories with the exception of micro organizations ($50 million to $500 million in revenue), which decreased in prevalence by 3 percent.
More than two-thirds of companies continue to implement one-year terms for directors, as companies feel more external pressure from investors and shareholder advisory groups to have directors on annual terms.
About NACD's Director Compensation Report
NACD works with Pearl Meyer annually to report on nonemployee director compensation. Together, we analyze proxy statements, US Securities and Exchange Commission filings, and other data to deliver insights into the state of board compensation for public companies from a wide range of industries. For further information or compensation consultation, please contact Jannice Koors, managing director at Pearl Meyer, by emailing firstname.lastname@example.org.