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Corporate Governance

: PomTalk

Directors? Compensation Keeps Going Up

By Fei-Lu Qian

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In a new comprehensive report by Towers Perrin on compensation for outside board directors of publicly traded companies, the report found that total compensation increased to a median level of $174,500 in 2006, up 8% from $162,285 in 2005. According to Towers Perrin?s press release, there is a premium level of compensation when directors are asked to act in particularized roles such as serving as the board?s chairman, lead director or chairing important board committees. Indeed, outside directors who acted as non-executive chairmen received an additional $125,000. Also, lead or presiding directors received a median additional fee in 2006 of $20,000.

Besides cash, ?93% of companies granted some form of equity compensation to their outside directors.? Interestingly, the granting of stock options as part of an outside director?s compensation actually fell to 36%HoH in 2006, compared to 39% in the previous year. However, 81% of the surveyed companies granted full-value shares to their outside directors, an increased from 77% in 2005.

Here is some good news. The study also found that companies doing a better job of disclosing their stock ownership guidelines for directors. In 2006, 68% of the studied companies disclosed the existence of such guidelines, up from 64% in 2005. Besides the new executive compensation disclosure rules as noted in previous posts, the new tables in proxy statements that require the disclosure of ?specific values for perquisites and benefits? are forcing companies to rethink their compensation programs and perhaps ?refine their director compensation practices in the coming year.?

Full post as published by PomTalk on November 14, 2007 (boomark / email).