2020-2021 Director Compensation Report

In brief: The compensation of nonemployee directors is a key component of governance in all corporations. A thoughtful compensation plan assists in aligning the interests of shareholders and directors, as well as providing value to directors for value received. The 2020–2021 Director Compensation Report, produced in collaboration with Pearl Meyer, provides a comprehensive perspective on director-pay practices across a wide range of industries and company sizes, including data from the largest 200 companies in the S&P 500.

Key Findings

• Total Direct Compensation: Across firms of all sizes, the percentage of companies delivering more than 50 percent of their total director pay in equity continues to increase, with small companies ($500 million to $1 billion in revenue) and medium companies ($1 billion to $2.5 billion in revenue) experiencing the largest increases at 4 percent and 3 percent, respectively, over the past three years.
• Equity Grant Practices: In 2020, the prevalence of fixed-value awards increased slightly across all size categories with the exception of micro organizations ($50 million to $500 million in revenue), which decreased in prevalence by 3 percent.
• Board Composition: More than two-thirds of companies continue to implement one-year terms for directors, as companies feel more external pressure from investors and shareholder advisory groups to have directors on annual terms.

A related publication, the Director Compensation: Summary Statistics, is available from Pearl Meyer and provides additional data on director compensation by industry and company size. For further information or compensation consultation, please contact Pearl Meyer by emailing nacddirectorpay@pearlmeyer.com.