Annual Survey Reveals Emergence of New Compensation Practices

by Barbara Blackford

This week, The Conference Board issued its The 2011 U.S. Director Compensation and Board Practices Report. The report is based on a survey of 334 public companies jointly conducted by The Conference Board, NASDAQ OMX, and NYSE Euronext between April and June 2011. The Harvard Law School Forum on Corporate Governance and Financial Regulation, Stanford University's Rock Center for Corporate Governance, the National Investor Relations Institute (NIRI) and the Shareholder Forum each endorsed the survey by distributing it to their members and readers. Participants in the survey (corporate secretaries, general counsel, and investor relations officers) were asked to provide information on a wide range of corporate practices, including: board composition and leadership, director election practices, anti-takeover practices, compensation practices, risk oversight practices, CEO succession planning practices, board-shareholder engagement practices, and policies on director performance assessment and retirement. Findings constitute the basis for a benchmarking tool with more than 120 data points searchable by company size (measurable by revenue and asset value) and 20 industrial sectors.

Major findings include:

Director compensation correlates more with company size than with industry. Median total compensation of board members ranges from $46,843 in the smallest companies to $190,000 in the largest. "This finding underscores a likely correlation between the rising director compensation levels observed in the last few years and the expanding array of governance and compliance responsibilities expected of boards," said Matteo Tonello, Executive Director, Corporate Leadership.

Computer services is the sector that most emphasizes equity-based compensation. When it comes to compensation mix, computer services is the industry with the lowest percentage of total director compensation awarded in cash retainer (26.6%); and the sector that placed the greatest emphasis on equity-based compensation (stock awards and stock options), which surpasses 70% of the total.

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