No Comp Crisis For Most Highly Paid Directors

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By Nanette Byrnes

No Comp Crisis For Most Highly Paid Directors

The Great Recession hasn’t stopped the music inside America’s boardrooms. According to compensation consultants Pearl Meyer & Partners, the typical director of a large corporation made $216,000 last year, up from $129,667 in 2003. For some, total compensation, including cash payments, stock grants, and other perks, has climbed above seven figures.

Directors can thank the Sarbanes-Oxley Act for companies’ continuing largesse. SarbOx was created to protect shareholders by reining in corporate executives; before, many boards had become little more than rubber stamps for everything from merger strategy to executive compensation—to disastrous effect in the cases of Enron, WorldCom, and Tyco (page 64). SarbOx and other regulatory efforts sought to protect shareholders by empowering directors and making them more accountable.

People can debate how much executives have been brought to heel since SarbOx, though in one important sense boardships have been fundamentally changed: Directors work a lot harder. A decade ago a typical director attended four board meetings a year and devoted about 100 hours a year to various board tasks, according to the National Association of Corporate Directors. These days directors spend an average of 225 hours a year on board duties, attending an average of six board meetings a year and convening at other times for committee meetings. Board service is "a job now," says Patrick McGurn, a corporate governance expert at New York-based consulting firm RiskMetrics Group. Directors of companies most affected by the financial crisis have logged 400-plus hours a year. In 2008, JPMorgan Chase’s board upped its meetings from 9 to 18, while AIG’s board met 19 times.

Below is a list of the most highly paid directors in 2008 at the largest 1,000 public companies in the U.S., based on Securities & Exchange Commission data compiled by Equilar, a Redwood Shores (Calif.)-based pay researcher. The figures include equity, which can include grants from earlier years.