LAKE FOREST, Ill.--(BUSINESS WIRE)--Meridian Compensation Partners, LLC, a leading executive compensation and corporate governance consulting firm, has found that median total compensation paid to outside directors in the Fortune 50 increased approximately 2% over last year to $281,667. For purposes of this analysis, total outside director compensation includes board cash retainer, board and committee meeting fees (including additional chair and member retainers), and equity awards as reported in 2015 proxy statements. Board retainers were relatively stable, with a median of $100,000, typically paid in cash.
Equity grant values comprise a majority (61%) of total compensation and increased approximately 3% year over year, with a median of $170,000. Annual equity awards are most commonly granted in the form of time-based restricted stock/units, with many companies requiring equity deferral until retirement or after director service ends. When applied, time-based vesting schedules usually lapse after one year to align with annual director elections. A majority (93%) of companies target a fixed annual grant value rather than a fixed number of shares or units. One-time initial hire grants are a minority practice with only 16% of companies making such grants.
A large majority (82%) of companies have stock ownership guidelines for outside directors, with the most common guideline being five times the board cash retainer. Meridian also observed a slight increase in the prevalence of additional stock holding requirements from 31% to 33% among Fortune 50 companies.
In 2014, the number of companies having a designated non-executive chair increased from 31% to 41%. The incremental compensation paid to non-executive chairs (above regular board pay) also increased 8% to $242,500 over last year.
2014 Median Total Compensation
| Market | Board | Avg. | Equity | |||||||||||||||||||||
| Fortune | Revenues | Value | Cash | Avg. Board | Comm. | Total | Grant | Total | ||||||||||||||||
| Segment | (FY14 $M) | (FY14 $M) | Retainer | Mtg. Fees | Fees | Cash | Value | Compensation | ||||||||||||||||
| Fortune 50 | $91,132 | $92,667 | $100,000 | $14,000 | $10,000 | $117,500 | $170,000 | $281,667 |
Note: Summary statistics are not additive
About Meridian Compensation Partners, LLC
With associates across 10 offices in the United States and Canada, Meridian’s executive compensation consultants provide independent, trusted counsel to Boards and management at hundreds of large companies in North America. We consult on executive compensation and its design, amounts and corporate governance issues. Visit us at www.meridiancp.com
