Compensation for directors of the 200 largest public companies dropped to an average of $244,899 in 2008, reflecting a 2.4 percent decline from $250,835 in 2007, according to a new study.
It was the first decline in five years, according to the study, released Thursday, July 23, by Steven Hall & Partners, a New York-based executive compensation consulting firm.
“There is a lot of competition for the top talent who are considered experts,” said Michael Sherry, a consultant at Steven Hall & Partners.
“For example, every audit committee is required to have at least one director who is deemed a financial expert. These companies are looking for people who can bring something to the table, and they are willing to pay for it.”
Last year’s decline in compensation was a reflection of the troubled economy and decline in stock prices, Sherry said.
The use of board meeting fees, in which directors receive per-meeting fees for attendance, also declined: 37 percent of the companies surveyed paid such fees in 2008, down from 68 percent in 2003.
“With board meeting fees going out of vogue, companies have consciously shifted value into directors’ annual retainers, both cash and stock,” Steven Hall, managing director of Steven Hall & Partners, said in a statement.
More companies are paying directors a lump sum for the year, either annually or by monthly or quarterly installments, Sherry said.
“There are a lot of meetings now, especially with committees such as the audit committee and compensation committees,” he said.
“The companies found that they weren’t having attendance problems.”