Total Board Director Compensation Rose in FY 2016

—Technology directors remain highest paid, while bank directors are paid least—

CHICAGO--()--In fiscal year 2016, total board director compensation for middle market companies increased 4 percent to $159,416, according to a new report from BDO USA, LLP, a leading accounting and consulting organization. While average committee retainers and fees, and full-value stock awards stayed relatively stagnant, board retainers and fees and stock options increased 9 percent and 3 percent from FY 2015, respectively.

The report, The BDO 600: 2017 Survey of Board Compensation Practices of 600 Mid-Market Public Companies, analyzed proxy statements filed between March 2016 and March 2017 for middle market public companies.

“In a time where transparency is the name of the game and performance is more closely linked to compensation, company stakeholders are working to find appropriate compensation mixes for boards, regardless of an organization’s size or industry,” said Tom Ziemba, a managing director in the Compensation and Benefits Practice at BDO.

Stock Awards See “Fullest Value”

This year, full-value stock awards (46 percent) and board retainers and fees (43 percent) made up a bulk of directors’ total compensation mix, trailed by stock options (6 percent) and committee retainers and fees (5 percent). Though the use of stock options as compensation increased slightly, it’s clear full-value stock awards remain the preferred method.

“Amid disagreements on the frequency of ‘say-on-pay’ shareholder votes for pay for directors, compensation continues to rise,” said Tom Ziemba. “Despite the common belief that cash is king, we found that companies of all sizes prefer compensating via equity over cash, despite the findings that show overall equity compensation is down by 1 percent. This fact is unsurprising, as full-value stock awards often encourages board retention.”

                     

Fiscal
Year

 

Board
Retainers
& Fees

 

Committee
Retainers & Fees

 

Stock Awards
(Full-Value)

 

Stock
Options

 

Total
Compensation

2016   $67,418   $8,112   $74,085   $9,801   $159,416
2015   $61,887   $8,134   $73,895   $9,472   $153,389
         

Technology, Healthcare and Energy Remain Highest Paid Boards

In keeping with years past, BDO analyzed pay across eight industries: energy, financial services, healthcare, manufacturing, real estate, retail and technology. The technology industry saw the highest average total compensation at $219,484 and bank directors saw the lowest average total compensation at $45,531.

Though bank directors saw the lowest total compensation, they experienced the largest bump at 15 percent, up from $39,511 to $45,531. While last year real estate had the highest compensation increase, this year board directors in this industry saw a 1 percent decrease to $167,539 from $169,088. Compensation mix varies across industries and company size.

                                 

Fiscal
Year

  Energy  

FS-
Banking

 

FS-
Nonbanking

  Healthcare   Manufacturing  

Real
Estate

  Retail   Technology
               
2016   $194,548   $45,531   $145,402   $217,552   $151,409   $167,539   $139,310   $219,484
2015   $189,204   $39,511   $137,427   $202,605   $146,412   $169,088   $128,860   $216,394
 

Larger Company, Larger Compensation

In addition to industry-specific compensation, the survey also breaks down data by company size. As in previous years, compensation increases as company size increased. Total compensation levels rose this year, but not for board directors at larger companies. While companies in the small and medium-sized category each saw total compensation increases of 6 percent, companies in the largest category saw a decrease of 1 percent.

     
Fiscal Year   Total Compensation by Size Category
 

$100 million –
$500 million

 

$500 million –
$1.25 billion

 

$1.25 billion –
$3 billion

2016   $128,035   $167,641   $182,921
2015   $120,336   $158,275   $184,770
   

About The BDO 600: 2017 Survey of Board Compensation Practices of Mid-Market Public Companies

The BDO 600: 2017 Survey of Board Compensation Practices of 600 Mid-Market Public Companies examined the compensation practices of publicly traded companies in the energy, financial services–banking, financial services–nonbanking, healthcare, manufacturing, real estate, retail, and technology industries. Companies in the six non-financial service industries in our survey have annual revenues between $100 million and $3 billion. Companies in the two financial services industries in our survey have assets between $100 million and $6 billion. Data sources include data provided by Salary.com and public company data collected from proxies and other sources.

*Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.

About BDO’s Compensation and Benefits Practice

BDO’s Compensation and Benefits practice offers an experienced and dedicated team of professionals who operate nationwide to seamlessly provide a comprehensive array of services to address client needs. Our team provides tax, accounting, and consulting services for all types of compensation arrangements, including cash and equity incentives, merger and acquisition related issues, employee stock purchase plans, qualified and nonqualified plan arrangements and other related services.

About BDO

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, and advisory services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 500 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 67,700 people working out of 1,400 offices across 158 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

For more information please visit: www.bdo.com.

Contacts

Bliss Integrated Communication
Rosie Izzi, 212-584-5482
rosie@blissintegrated.com

Contacts

Bliss Integrated Communication
Rosie Izzi, 212-584-5482
rosie@blissintegrated.com