Board pay up 3%, continues to adapt.

Author:Watson, Willis Towers

Ed. Note: A new analysis by Willis Towers Watson shows total pay for outside corporate directors increased by a modest 3% last year, with annual cash retainers for board service reaching $100,000 for the first time since the company has conducted this analysis. More details from the global advisory firm's study, which was released in July 2016, are below.

According to Willis Towers Watson's annual analysis of director compensation at Fortune 500 companies, median total direct compensation for directors climbed 3% last year, to $263,500, an increase from nearly $255,000 in 2014. Total compensation, which includes cash pay, and annual or recurring stock awards, had increased 4% the previous year. The median value of cash compensation increased 6% in 2015, to more than $108,000. Meanwhile, the value of stock compensation rose 3% at the median, to almost $150,000. The average mix of pay remained relatively constant at 57% in equity and 43% in cash.


"Companies continue to adjust their director pay programs with an eye toward rewarding directors for their overall contributions rather than for how many meetings they attend," says Robert Mustich, leader of Willis Towers Watson's Executive Compensation Consulting practice in the eastern United States. "The fact that a third of the companies we analyzed changed one or more core elements of their pay program in the past year reflects an ongoing trend toward companies reviewing and adjusting their director pay packages on a regular basis to remain competitive."

The annual cash retainer for board service increased 9% in 2015, rising to a record high of $100,000 at the median. About one-fifth of the companies (19%) increased their board retainer. The prevalence of variable elements of cash pay continued to shift in opposite directions. The use of committee attendance fees fell from 22% to 18%, while the use of flat, retainer-based pay for committee service increased from 25% to 27%. Additionally, the number of companies providing...

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