ISS's report on director pay levels and trends based on 2019 proxy data reveals these and other key takeaways:
- Pay Amounts
- The S&P 500 median total annual director compensation - $285,000 - is 63% higher than the median total director pay for the rest of the Russell 3000.
- The Russell 3000 median director compensation of $198,000 is up 2.7% from last year's $193,000.
- Smaller (non-S&P 1500) Russell 3000 companies experienced the highest rate of increase in median pay - 5.2% year-over-year. This compares to an increase of 2.9% for the S&P 500.
- Industry Variations
- Among S&P 500 companies, Pharmaceutical, Biotechnology & Life Sciences companies have the highest median director pay at approximately $347,000. Software & Services, Media & Entertainment, Tech, and Telecommunications median pay is also at the high end ($310,000 - $320,000), with Real Estate and Banks bringing up the rear at about $246,000.
- ISS surmises that higher industry-correlated director pay may be skills/expertise-driven.
- Equity
- Russell 3000 companies pay approximately 60% of total director compensation in equity. Larger companies are slightly more likely to pay directors in stock.
- Based on disclosure, director stock ownership guidelines are common at large companies, but 50% of smaller companies have no disclosure about this, as shown here:
Importantly, the post acknowledges that - generally speaking - investors believe that the upticks in director pay are justified based on the ways in which the role has been evolving, i.e., increasing investor expectations and regulatory demands, and related time commitment requirements.
Access additional information & resources on our Director Compensation page. This post first appeared in the weekly Society Alert!