Page 642 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Chapter 10. The Board of Directors 627

Member Chairman Total Committee Pay
Number of
Meetings
Company Retainer Mtg Fee Retainer Mtg Fee Member Chairman
D $0 $2,000 $10,000 $2,000 6 $12,000 $22,000
B $8,000 $950 $11,000 $950 4 $11,800 $14,800
G $5,000 $1,500 $8,000 $1,500 4 $11,000 $14,000
M $0 $1,200 $3,000 $1,200 6 $7,200 $10,200
C $3,000 $1,000 $4,000 $1,000 6 $9,000 $10,000
J $0 $1,000 $4,000 $1,000 6 $6,000 $10,000
E $0 $1,000 $3,000 $1,000 7 $7,000 $10,000
A $0 $0 $8,004 $0 2 $0 $8,004
$0 $1,600 $0 $1,600 5 $8,000 $8,000
$0 $1,000 $0 $2,000 4 $4,000 $8,000
K $0 $1,000 $0 $1,000 6 $6,000 $6,000
Minimum $0 $0 $0 $0 2 $0 $6,000
Maximum $8,000 $2,000 $11,000 $2,000 7 $12,000 $22,000
Average $1,455 $1,114 $4,637 $1,205 5 $7,455 $11,000
Median $0 $1,000 $4,000 $1,000 6 $7,200 $10,000
Brucell $4,000 $1,500 $6,000 $1,500 7 $14,500 $16,500
/ Average 175.0% 34.7% 29.4% 24.5% 37.5% 94.5% 50.0
/ Median N/A 50.0% 50.0% 50.0% 16.7% 101.4% 65.0
Note: Options valued at one-third grant cost. Zeros were included in all calculations.
Table 10-21. Survey of compensation committee compensation
the annoyance of a legal action and the public embarrassment of being charged with negligence.
As indicated earlier, an up-front sign-up bonus similar to that used in professional sports may
become necessary, especially for troubled companies. Board members may also seek a change
of control contract, especially if such contracts exist for senior executives. The formula for cash
awards would be tied to board retainers (and possibly meeting fees) or some period of W–2
earnings. Definitions of single- versus double-trigger contracts would mirror those of execu-
tives as well. Such contracts were discussed in Chapter 6. (“Employee Benefits and Prequisties”)
The position of CEO/chair is common, and significant survey data is available. However,
if the positions are split, then survey data for each needs to be obtained. The pay for each,
although less for the combined positions, is significantly more when the pay of the two
independent positions is added together.
Given the increased responsibilities brought about by the Sarbanes-Oxley Act and
by shareholders and the shrinking base of available talented individuals, director pay is
expected to increase dramatically in the coming years.
Overall Basis

Approaching director pay from an overall basis suggests first determining the competitive
level of pay—which was done in the previous section, using surveys. Given this information,
a determination is made as to what the board should be paid (e.g., 50th percentile of the
survey data). Pay level should be in relation to the complexity of the industry and the
difficulty of attracting and retaining directors.