Spencer Stuart Board Index
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Three-quarters of boards grant stock to directors as<br />
part of compensation<br />
»<br />
» 76% of S&P 500 boards provide stock grants to directors in addition to paying a cash retainer, compared<br />
with 64% a decade ago. The average targeted dollar value of annual stock grants is $155,328.<br />
»»<br />
By comparison, stock options for directors have become much less common. 14% of S&P 500<br />
companies now offer option plans, compared with 51% in 2006. The average targeted value of annual<br />
stock option grants is $95,402.<br />
»»<br />
51% of boards allow directors to choose to receive their compensation in cash, stock or stock units, but<br />
only 4% offer stock options as an alternative choice.<br />
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Eight boards, 2% of the total, pay director retainers fully in stock.<br />
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91% of boards disclose having share ownership guidelines for directors, which are meant to align<br />
directors’ interests with those of stockholders. A decade ago, 62% disclosed director share ownership<br />
guidelines. Typically, these guidelines require directors to own a certain number of shares or a multiple<br />
of the retainer value within a specified number of years.<br />
Equity Compensation<br />
% of S&P 500 boards<br />
2016 2011 2006<br />
Stock option program exists 14% 28% 51%<br />
Equity paid in addition to retainer 76% 77% 64%<br />
Equity paid as a part of retainer 22% 18% 21%<br />
Director can elect to receive compensation in cash, stock, or stock units 51% 57% 60%<br />
Director can elect to receive compensation in stock options 4% 5% 7%<br />
Retainer paid fully in stock 2% 2% 3%<br />
Most boards provide a premium for board leadership service<br />
»<br />
» 95% of the 132 independent chairmen of S&P 500 boards receive an additional fee, which ranges from $25,000<br />
to $820,546 and averages $165,112. The median premium paid to independent chairmen is $150,000.<br />
»»<br />
65% of the 417 S&P 500 boards with a lead or presiding director provide additional compensation to<br />
directors serving in those roles, compared with 61% of boards one year ago.<br />
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Lead directors are more likely than presiding directors to receive additional compensation: 80% versus<br />
27%. The average lead director premium is $33,565, 5% higher than the $31,848 average premium for<br />
presiding directors.<br />
»»<br />
Supplemental compensation for lead and presiding directors ranges from $6,000 to $175,000 and<br />
averages $33,354 for the combined roles.<br />
board index 2016 37
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