U.S executive pay set to soar still further


Directors of major American companies took home on average $204,000 last year, a hike of 12 per cent and the third year running that growth has been in double digits. Yet there may be even more growth to come, a new survey has predicted.

The report from compensation consultancy Pearl Meyer & Partners was based on 2006 public filings by the 200 largest U.S. industrial and services companies.

Director pay, it found, now tops $100,000 at all but six of the major companies studied and exceeds $400,000 at nine companies.

"Director pay will continue to grow, in tandem with boards' more public and activist role in corporate oversight," said Joseph Rich, Pearl Meyer & Partners president.

"The structure of pay is also changing, as boards parallel a trend in executive pay programs by shifting more of their own equity-based compensation from stock options into full-value grants," he added.

Median pay for service on compensation committees was up nearly 18 per cent to $6,000, this year, while median pay for audit committee membership was up 9 per cent to $10,900, the survey reported.

Rich predicted a period of even greater growth may be on the horizon. "The SEC's new disclosure rules entail much greater compliance responsibilities for compensation committees, similar to the impact that Sarbanes-Oxley had on the audit committee function," he said.

"Boards that have not yet enhanced pay for compensation committee members are likely to do so in 2007," he added.

The average value of equity provided to directors rose by nearly 10 per cent, with a continuing and pronounced shift in the type of vehicles used.

Continuing concerns about stock option use contributed to a fourth straight decline in the average value of option grants to directors, down nearly 9 per cent to $39,000.

By contrast, full value stock grants soared in value by more than 21 per cent on average, to more than $82,000.

There was also a 20 per cent increase, to $60,000, in the average value of board retainers.

All but three of the companies surveyed provided a board retainer, with 12 companies paying retainers of $100,000 or more. Median Board meeting fees were unchanged at $7,000.