Median board member pay rose to $300,000 per year, up 3.4 percent from the median pay of $290,000 last year, according to the latest survey from Compensation Advisory Partners (CAP).
According to board surveys by the consulting firm McKinsey & Company, directors spent on average 1,075 hours on board work in 2016. This is equivalent to about 20 hours of work per week. This means that board members receive a median pay of $279 per hour.
The CAP survey found that board member compensation was a combination of cash and equity. On average, companies offered total pay to board members comprised of 61 percent equity and 39 percent cash. This was consistent with the prior year. Only a quarter (24 percent) of companies increased their retainers (cash and/or equity) offered to board members.
Some board members received additional compensation. The survey found that non-executive chair directors received additional median compensation of $233,000 per year. Lead directors received an additional $35,000 in compensation. Both measures were in line with the prior year. Additional compensation for these positions is due to different responsibilities.
Of note, pay limits are now a standard practice. Fifty-four percent of the largest 100 companies surveyed now have an award limit for director compensation, up from 47% in the prior year. These pay limits are likely a result of litigation where directors have approved their own annual compensation. Director pay limits range from $250,000 to $4.75 million.
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