While executive pay has been under the microscope for more than a decade, director pay evaluations are comparatively new. However, proxy advisory firms and the Council of Institutional Investors have implemented policies and recommendations for voting on the issue. Meanwhile, many companies have recognized the increased spotlight and reduced or eliminated their directors' cash fees during the COVID-19 crisis.
- The need to attract high quality candidates may necessitate increased use of sign-on grants and increased cash payments to cover taxes of vesting shares.
- Compensation may be driven higher by increased responsibilities related to enhanced focus on ESG and human capital metrics reporting. Directors will be expected to push management towards improving these elements and the additional time requirements could push pay higher, especially for service on specific committees.
- Recent case law in Delaware highlights the need for robust director compensation planning – from seeking independent consulting services specifically for director pay to seeking shareholder approval for director equity plans.
The online tool allows users to break out various director compensation elements and compare across both full indices (S&P 500, Russell 3000) as well as specific market sectors.