Tag: Board of Directors

More Long-Tenured Directors Heading for Exits

Directors with decades of experience as well as those in their 70s are retiring or opting not to stand for reelection. Meanwhile, new board appointments show that searches are prioritizing gender diversity, technology and cyber security.

According to public company intelligence provider MyLogIQ, in the past six weeks, the boards of AutoZone, Campbell Soup Company, Cigna Corporation, Microsoft Corporation, NRG Energy and Walgreens Boots Alliance announced the departures of directors with at least a decade of service under their belts or directors in the age range of 70 to 75, which is often the span in which a mandatory retirement age is selected for boards with such policies.

In addition, Pfizer and Intel Corporation both underwent board leadership transitions. Pfizer executive chairman and former CEO Ian Read announced that he would step down from the board effective Dec. 31, 2019. Current CEO Albert Bourla will become chairman effective Jan. 1, 2020. Intel lead director Aneel Bhusri announced that he would retire from the board on Nov. 1, 2019. Bhusri will be replaced by Omar Ishrak, who serves on the board’s executive committee and co-chairs the corporate governance and nominating committee.

Eyeing Lawsuits, Boards Tighten Limits on Director Pay

Boards are continuing to adopt limits on the amount of compensation directors can earn in a year to protect against pay lawsuits alleging breach of fiduciary duty. However, as more suits have progressed, some boards are implementing new limits that appear to be trending lower than those adopted previously, and a few boards have even reduced existing limits.

For instance, the Synaptics board had previously adopted a $750,000 limit that applied to equity grants awarded to directors in a fiscal year. Starting in 2019, however, the $750,000 limit will now apply to cash and equity paid to directors. Similarly, the Alnylam Pharmaceuticals board adopted limits in 2016 covering the maximum number of shares of common stock that could be awarded to directors in initial and annual stock option grants. In 2018, the board reduced the number of options grants to directors and implemented new, lower limits based on the reduced options grants and adopted an aggregate limit covering the maximum number of shares that could be awarded to the full board.

These Companies Paid Their Boards Over $10 Million

Chief executive officer pay levels have become part of a heated debate about how much public company leaders should be paid. Some packages have risen into the tens of millions of dollars each year. Shareholder groups have tried to block these large pay packages, but almost entirely without success. CEOs at big companies do work hours that some admit can stretch to 60 or more a week. Boards of directors of these companies, on the other hand, attend a handful of meetings a year, often as few as one per quarter. In some cases, the modest work has been rewarded with huge sums of compensation. Several companies paid their boards over $10 million last year. Here is a list of 25 boards of directors with shocking pay packages.

Directors do need to work between meetings to prepare for them. At some companies, mergers and acquisitions activity, financial audits and executive compensation meetings do take up additional hours. Compensation for these usually comes in packages that include both cash and stock awards or options. However, public companies that made $10 million in aggregate compensation to their boards numbered nine last year, according to data from MyLogIQ.

At the top of the list is Tesla. The total compensation of its 10-person board reached nearly $61 million. Note that CEO Elon Musk does not receive money to sit on the board.

These Are the Highest-Paid Corporate Board Members in the U.S.

At a number of major American companies, compensation for board of director members has come under fire from shareholders in recent years. While director salaries remain a small fraction of CEO salaries (these are the highest paid CEOs at America’s largest companies), they have steadily risen over the past decade. In several recent instances, shareholders have even pursued litigation against – what they consider to be – excessive board compensation.

According to data from public company intelligence provider MyLogIQ, the average compensation of nonexecutive board chairpersons at Russell 3000 companies was $330,782 in fiscal 2018. At 18 public companies, the nonexecutive chair of the board made over $1 million.

At a public company, the board of directors is a supervisory body appointed by shareholders to act on their behalf and oversee the activities of management. The chairperson is chosen by the board and is typically responsible for setting the agenda and presiding over meetings. While some companies have combined CEO-chair roles, the majority of large corporations separate the two positions, maintaining certain checks and balances between the branches of corporate governance.

Board Members Who Make More Than $1 Million

At a number of major American companies, compensation for board of director members has come under fire from shareholders in recent years. While director salaries remain a small fraction of CEO salaries (these are the highest paid CEOs at America’s largest companies), they have steadily risen over the past decade. In several recent instances, shareholders have even pursued litigation against — what they consider to be — excessive board compensation.

According to data from public company intelligence provider MyLogIQ, the average compensation of nonexecutive board chairpersons at Russell 3000 companies was $330,782 in fiscal 2018. At 18 public companies, the nonexecutive chair of the board made over $1 million.

At a public company, the board of directors is a supervisory body appointed by shareholders to act on their behalf and oversee the activities of management. The chairperson is chosen by the board and is typically responsible for setting the agenda and presiding over meetings. While some companies have combined CEO-chair roles, the majority of large corporations separate the two positions, maintaining certain checks and balances between the branches of corporate governance.

Boards Expand to Open Seats for New Directors

In recent weeks, several boards have grown in size to bring on new directors.

According to SEC filings analyzer MyLogIQ, boards of such companies as Ball Corporation, Micron Technology and Oracle amended bylaws dictating board size in order to appoint new directors, while Cintas, Ford Motor Co. and General Mills expanded without needing formal votes on bylaws.

All the new directors appointed to the preceding boards are women, and in the case of Ball Corp., the appointment of Betty Sapp — former director of a joint Department of Defense-Intelligence Community organization — brings the percentage of women on the board to 40%. General Mills’ June 24 appointment of former McKinsey & Company leader Elizabeth Lempres brings the percentage to 46%.

Companies Boost Pay for Board Leaders

Boards are granting compensation increases to non-executive chairs and lead directors as both roles grow increasingly more complex and, more broadly, as governance processes and board quality take center stage with investors.

An analysis from SEC filings analyzer MyLogIQ shows that such companies as CIT Group, Insperity, International Flavors & Fragrances, Kroger, Old Dominion Freight Line, Penske Automotive Group , Sientra and Verint Systems have granted pay raises to lead directors in the past year, some more than doubling the retainers for the role. Others such as Carlisle Companies, ConMed Corp., HCP, Lyondell Basell Industries, Mosaic, Office Depot and Rent-A-Center boosted pay for board chairs. In addition, Walmart, which has a lead director and board chair, granted raises to directors in both roles following the board’s review of its annual pay benchmarking analysis.

Agenda Research Vault – Director Churn Report

Agenda partnered with SEC filings analyzer MyLogIQ to obtain data points on the directors appointed to Russell 3000 board seats in the first three months of 2019. The following spreadsheets include additional data points beyond those presented in graphics and text for the article, “Boards on Cusp of Major Generational Shift” and can provide some additional context on the disclosed reasons directors left boards and a month-to-month comparison of the comings and goings of Russell 3000 board members.