Upfront: Board Compensation Climbs

Compensation for corporate directors in the United States has increased substantially over the past year, according to new research by the Hay Group on companies in the S&P 1500 SuperComposite Index.

On the surface, the changes appear modest compared with the substantial increase most compensation experts anticipated in the overall level of director pay. However, the rise seems more dramatic when considered in light of the fact that the median stock price among S&P 1500 organizations declined by approximately 16 percent during the same time period; most director-compensation programs denominate equity compensation as a fixed number of shares. Factoring in changes in stock price, total direct compensation for board members in the S&P 1500 has risen by a median of 30 percent over the past year.

This change is largely a result of new regulations that have simultaneously reduced the pool of qualified independent directors and increased board members' personal risk, commitment and accountability.