These days, when corporate travails run the gamut from hard-fought takeovers and near-financial failures to shareholder suits, members of corporate boards are finding themselves operating under increasing pressures. But they can take heart because their compensation is increasing in kind, according to two surveys of directors` pay levels for 1984.
In fact, outside directors` pay is rising at such a healthy pace that the New York-based Conference Board has decided to review it every year rather than every other year.
”The rate at which compensation has been rising and the continuing interest in the subject strongly recommended it,” said President James T. Mills in comments prefacing the Conference Board`s report.
The Conference Board study of nearly 1,000 U.S. companies in 42 industry categories found that, as historically has been the case, directors of manufacturing companies remain the most generously paid.
The study found that the median total potential annual compensation for manufacturing firms` outside directors rose to $18,900 in 1984, a $1,900 increase, but nonfinancial service companies are fast making gains. In 1984, their outside directors` median potential annual pay gained by $2,125 to $16,125.
”The dollar gains in medians for manufacturing and nonfinancial service companies are about $2,000,” the report noted, ”and they are impressive because they roughly equal the dollar gains in those industries for the two-year period measured in our 1983 survey.”
On the other hand, financial companies, which had shown the biggest gains in the two prior Conference Board surveys, posted the smallest 1984 median pay increases, advancing only 6 percent to $14,200 from $13,425.
Another study of 93 of the 100 top industrial firms (measured by revenues) by Lincolnshire-based Hewitt Associates found that basic annual retainers paid to outside directors in 1984 ranged from $8,000 to $46,500.
Among those firms that paid retainers, approximately one-third raised the amount paid since 1983, with the increases averaging a healthy 21 percent, Hewitt also found.
When it comes to benefits, however, the Hewitt study noted, ”The prevalence of benefits (pension, life insurance, etc.) remains relatively low.”
Although 23 percent of the surveyed companies provide directors with pensions, only 14 percent provide life insurance. Ten percent provide accidental death benefits, and those are often limited to business travel.
Among the other findings by the Conference Board:
— An annual retainer is paid to outside directors by 97 percent of the manufacturing and nonfinancial service companies, and 92 percent of the financial firms do so. Most also pay a per-meeting fee for attendance.
— Fees range from $400 to $2,000 for attendance at each regular board meeting and average $760. Most outside directors also are paid for attending board committee meetings. Fees for audit committee meetings, for example, range from $300 to $2,000 and average $700.
— The number of deferred compensation plans for directors rose 9 percent in one year, with 51 percent of the companies surveyed now offering such plans.
