If you get an invitation to join a corporate board, you'd better accept it. The pay already was good and keeps getting better.
The median total direct compensation for outside directors hit $263,500 last year, an increase of 3% from the prior year, according to an analysis of pay packages from the 500 largest companies by revenue released Tuesday by Willis Towers Watson, a global professional services firm.
Not bad for a job that only requires an average of about eight meetings a year.
Much of that pay comes from stock awards, a median of $150,000 to be exact. But in a new development, directors scored a median of $108,000 last year just in total cash payments. That's the first time the cash payment to directors has exceeded $100,000, and this piece of pay alone was up 6%. That $108,000 cash payment includes a median of $100,000 for a retainer, $2,000 for board meeting fees and other cash for being part of various committees. A fifth of companies increased their annual cash retainers last year.
The increases in pay could be the result of more companies looking to get away from paying per-meeting fees to directors and paying "more for value of contributions," says Robert Mustich, Willis Towers Watson's managing director of executive compensation for the East Coast.
Many companies are making changes to their boards to boost retention of stock and to encourage directors to own stock. More than 90% of the companies studied require board members to own or retain company shares. To control "excessive" director compensation, more companies are putting annual limits on awards. Willis Towers Watson didn't release pay statistics on individual companies.
But investors don't have to look far to find some cases where board members were paid well above the median of large companies. All nine directors at Salesforce.com (CRM), a company that provides technology to companies, were paid a total of $580,000 or more in fiscal 2016. Sanford Robertson, founder of technology investment bank Robertson, Stephens, has been a Salesforce board member since October. 2003. Last year, he was paid a total of $634,493 for his role on the company's board.
Despite the large pay packages, companies are still having trouble finding candidates, Mustich says. "Given the growing demands and pressures being placed on directors, attracting and retaining qualified candidates to serve remains a challenge for many companies," he says.