Pay increases for U.S. directors and CEOs

Increased oversight role of boards places greater demands on directors and high profits lead to higher total compensation for CEOs

Outside board directors received higher compensation this year than last in two out of three major industry sectors, a recent study found.

The Conference Board’s annual study of outside (non-employee) director pay, conducted jointly with the Society of Corporate Secretaries and Governance Professionals, surveyed 425 companies.

“The oversight role of corporate boards is intensifying, resulting in significantly higher demands on board members,” said Charles Peck, compensation specialist at the Conference Board, in a press release. “The chairmen of audit committees are especially under rising new pressures. These increased demands account for the higher retainers paid to audit committee chairmen than to other committee chairmen.”

In manufacturing, the average total compensation for outside directors is now $91,250, up from $72,750 in 2004. In the service sector, the average is $81,875 this year, up from $70,000 last year. Financial services saw the only decline as this year’s average of $64,500 was slightly lower than last year’s average of $67,000.

CEOs compensation was higher in all industries in 2004, the latest year for which data is available.

“Profit performance was generally good in 2004,” said Peck. “As a result, annual bonus plans, which are usually based on profitability, paid off well in many cases.”

Total CEO compensation (salary, bonus and long-term pay) was highest in the construction industry at $2,836,000. It was lowest in transportation at $803,000.

The report is based on data from 3,143 U.S. companies in 14 major industries and reports the compensation paid to the five highest-paid executives.

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