The director's cut - Corporate Governance - survey finds board members are getting paid more as they take on more responsibility

Board members, especially those serving on audit committees, have taken on new risks and responsibilities. Now they're getting paid more, too.

That's the conclusion of a recent survey by Sibson Consulting. Of the 69 companies that took part in the survey, about two-thirds are either making or planning material changes to their directors' compensation by upping per-meeting fees and retainers and altering the cash and equity mix for their directors. And where committee service is involved, all of the companies planning to make changes to committee pay say they plan to increase compensation for audit-committee service.

"Everybody has been reevaluating," says Susan Shultz, president of Phoenix-based SSA Executive Search International Ltd., as well as the author of The Board Book (Amacom, 2000). "Sizable companies now see that directors are worth more money."

That's because they're doing more work. Shultz estimates that committed board members currently work an average of 300 hours a year for each board they sit on. And, she says, they are taking a more strategic role in the company.

Arthur J. Gallagher & Co., an Itasca, Ill.-based insurance brokerage and risk-management firm, is increasing fees for all of its outside directors, says CEO Pat Gallagher. In May, the company,, which lets board members choose whether they want their compensation in options or in a combination of cash and options, raised per-meeting fees from $500 to $1,000, and retainers from $20,000 to $30,000. "Board members are doing more work because of [the) Sarbanes-Oxley [Act)," he says. "There's now a heightened chance of an increase in their personal liability, and they're taking their responsibilities seriously."

COMMITTEE PAY

Most common changes to committee compensation

                           Median new       Median increase
                          pay component  of existing component

Committee-chair retainer     10,000              5,500
Committee retainer            5,000              2,500
Meeting fees                  1,000                250

SOURCE: SIBSON CONSULTING

Note: Table made from bar graph

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