CHICAGO--(EON: Enhanced Online News)--Board director compensation levels for middle market companies kept pace with the economy between 2014 and 2015, according to a new report from BDO USA, LLP, a leading accounting and consulting organization. Following years of solid increases, compensation remained relatively level at $153,389.
“Scrutiny around executive pay is intensifying, with shareholders and investors making strides in pushing for greater transparency and tightening links to performance”
The report, The BDO 600: 2016 Survey of Board Compensation Practices of 600 Mid-Market Public Companies, analyzed proxy statements filed between March 2015 and March 2016 for middle market public companies.
“Scrutiny around executive pay is intensifying, with shareholders and investors making strides in pushing for greater transparency and tightening links to performance,” said Randy Ramirez, a senior director in the Global Employer Services Practice at BDO.
The report found that full-value stock awards were the heaviest component (48 percent) of director’s pay packages in 2015, consistent with recent years. Board retainers and fees comprised another 40 percent of pay, followed by stock options (6 percent) and committee retainers and fees (5 percent). Stock options have been fading out of director compensation packages over the last several years and saw an eighteen percent drop from a year earlier.
“Restricted stock, which includes a vesting element that encourages retention, has become a more popular pay vehicle across industries,” said Ramirez. “Stock options, which are more leveraged and may not always yield compensatory value over its term, have fallen out of favor, except in the technology sector where the average value of stock options has increased.”
|Stock Awards||Stock Options||Totals|
Energy, Healthcare and Technology Directors Take Home Biggest Salaries
BDO analyzed director pay across eight industries: energy, financial services (banking), financial services (non-banking), healthcare, manufacturing, real estate, retail and technology industries. Pay ranges varied drastically across industries—banking directors were at the lowest end receiving an average of $39,511 in total compensation; technology directors were at the highest end, averaging $216,394.
Real estate directors received the biggest bump in pay, increasing 4 percent between 2014 and 2015. Energy and financial services (banking) directors were hit with the biggest decrease in pay, down 3 percent year-over-year. Still, energy directors received the third highest salary across industries, averaging $189,204.
|Energy||FS - Banking||
Performance is a driving force behind technology and healthcare directors’ high salaries; their compensation packages have the highest percentage of equity-based pay across all industries.
Compensation Correlated with Size of Company
While compensation for Board members overall was flat, it decreased slightly among larger companies.
|Company Size||2015 Director Pay||2014 Director Pay|
|$100 million - $500 million||$120,336||$120,620|
|$500 million - $1.25 billion||$158,275||$155,043|
|$1.25 billion - $3 billion||$184,770||$189,787|
About The BDO 600: 2016 Survey of Board Compensation Practices of Mid-Market Public Companies
The BDO 600: 2016 Survey of Board Compensation Practices of 600 Mid-Market Public Companies examines director compensation trends in publicly-traded companies with annual revenues ranging from $100 million to $3 billion in the energy, healthcare, manufacturing, real estate, retail and technology industries; and publicly-traded companies with assets ranging from $100 million to $6 billion in the banking and financial services industries. The study includes proxy statements that were filed between March 2015 and March 2016.
*Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.
About BDO’s Global Employer Services Practice
BDO’s Global Employer Services practice offers an experienced and dedicated team of professionals who operate nationwide to seamlessly provide a comprehensive array of services to address client needs. Our team provides tax, accounting, and consulting services for all types of compensation arrangements, including cash and equity incentives, merger and acquisition related issues, employee stock purchase plans, qualified and nonqualified plan arrangements and other related services.
About BDO USA
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 63 offices and more than 450 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,408 offices in 154 countries.
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information, please visit: www.bdo.com.