Corporate directors earned 41 per cent more in 2004 than in 2002, a recent survey found.
“It is not surprising that the compensation levels for board members are increasing much faster than wages in the broader workforce,” said Prem Benimadhu, vice-president, organizational performance of the Conference Board.
“There are two main reasons for this. First, directors are feeling the pressure of an increased workload and exposure to financial, reputational and personal risks. Second, companies are facing the growing challenge of finding directors with the requisite depth of knowledge and technical expertise.”
Among the 49 companies that responded to the Conference Board’s
Compensation of Boards of Directors Surveys
, the average annual compensation for outside directors increased from $26,177 in 2002 to $36,917 in 2004.
Directors are spending more time on board business — 52 per cent of organizations indicated that their regular board meetings have increased in length and frequency, while 71 per cent reported longer and/or more frequent audit committee meetings.
Compensation for directors varied significantly among survey respondents depending on size, sector and industry, ranging from a low of $2,000 to a high of $235,200. The average 2004 compensation was $35,433 among all 103 survey respondents, mostly medium-sized and large organizations.
The highest average compensation levels for directors occurred in firms in primary industries, communications and telecommunications, financial services, real estate and holding companies.