Is It the End for Big Director Pay Raises? - Careers - CFO.com

Is It the End for Big Director Pay Raises? - Careers - CFO.com


Is It the End for Big Director Pay Raises?

Ever so slightly, shareholders are starting to work up some concern over board compensation, which has risen annually in the double digits in recent years, a new study shows.

David McCann - CFO.com US
February 10, 2009

Excerpts:

With executive compensation being thoroughly vetted — and not just at companies that take federal bailout money — will closer scrutiny of directors' pay be far behind?

Maybe not, though until recently, few shareholders have objected to board compensation, despite the fact that it has risen steadily in recent years. That comfort came mostly out of a desire to attract and retain directors who are motivated and committed to their oversight roles.


Now one corporate governance research firm is seeing a slight shift in that attitude. "Just in this past year, I've started to notice a few people saying, about some companies at least, that the directors are being paid a lot of money, but are they really doing that good of a job?" said Paul Hodgson, senior research associate with The Corporate Library.

Still, Hodgson isn't sold on the idea that a revolution is at hand, at least not yet. "I'll believe it when I see it. I don't think it will be particularly widespread," he added.

According to the report [The Corporate Library's Director Pay 2008 study] , it was the third straight year of double-digit increases for both individual directors and entire boards. Individuals earned a median of almost 12 percent more than the previous year, but because the average board shrunk in size, the median total board pay climbed only 11 percent.

Hodgson attributed the steady climb of director compensation to the tightened regulatory environment spurred by the big corporate scandals earlier in the decade and the resulting passage of the Sarbanes-Oxley Act.

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http://www.cfo.com/article.cfm/13095180/c_2984338
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.