This Week in Leadership (Nov 29 - Dec 5)
Questions—and answers—about the Omicron variant's impact on organizations. Plus, critical year-end moves to boost your career.
Many of them spent more hours doing the work. And certainly the complexity of the task grew in most cases. But as a group, board directors didn’t walk away with any fat raises last year.
According to Korn Ferry Hay Group’s just-released 7th Annual Director Compensation Study, total director compensation rose in the 3% to 5% range. Pay was generally between $275,000 to $295,000 last year, up from $265,000 to $280,000 the prior year.
“It’s not surprising that we’re seeing director compensation increases,” says Irv Becker, senior client partner and North American leader for Korn Ferry Hay Group’s Executive Pay & Governance practice. “This rise reflects increased board responsibilities and time commitments, as well as heightened liability concerns and pressure from investors and governance watchdogs.”
The director compensation study includes data from the 300 largest companies with revenues greater than $9 billion that filed their proxy statements between May 1, 2016, and April 30, 2017.
In a trend that began several years ago, companies are continuing to eliminate board meeting fees—now paid by only 11% of companies in the study, down from 16% last year. Instead, companies are focusing on packages that include an annual retainer, committee chair retainers and long-term incentives.
Key findings of the director compensation study include:
As boards increasingly compete for directors, appropriate compensation becomes a more relevant, critical concern, especially given now-common limitations on board service. CEOs and other C-suite executives—those most actively sought as directors—are often limited to one outside board, and sometimes none.
“Director pay needs to move higher faster, especially for lead directors,” says Dennis Carey, co-leader of Korn Ferry’s Board Services practice. “Even though the vast majority of directors take on the role without focusing on compensation, boards should recognize the value directors bring and not be shy about aggressively rewarding them for their time and fiduciary responsibilities.”