How to reward your board of directors.

• Position: Survey

If you're defining compensation for your firm's board of directors - or accepting a check from another company for your own spot on its board - now you can benchmark your directors' compensation plan against those of other top U.S. companies.

Financial Executives Institute and Arthur Andersen just completed a study of board compensation that examines board and committee retainers and fees, equity grants and benefits for approximately 3,000 directors at 312 organizations.

Not surprisingly, providing appropriate levels of pay for board retainers and meeting fees affects an organization's ability to attract and retain the individuals it wants on its board. The size of the organization is a key determinant of the amount of the annual retainer provided to outside directors (see chart). Among specific industries, the survey finds the food and tobacco products industry pays the highest board retainers (at $27,500), and the publishing and printing industry pays the lowest (at $8,000). The median retainer for all companies is $14,000. But board meeting fees are not affected significantly by either company size or industry and remain quite consistent at $1,000 per meeting.

The 1997 Board of Directors' Total Compensation Report also includes information on retainer and meeting fees for the eight most prevalent standing committees of the board. The median for committee meeting fees ranges from $550 to $1,000 per meeting. The nominating and public affairs committees pay the highest fees to their members, both at $1,000 per meeting.

Almost 70 percent of the organizations surveyed use an equity plan in their director compensation program. The majority of companies provide equity grants to their directors through an initial grant at appointment (58 percent of those that provide grants) and/or on an annual basis (69 percent). The size of the grant is most often a set number of shares as opposed to a predetermined value, and stock options are by far the most prevalent form of...