Tag: Board of Directors

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.

Boards on Cusp of Major Generational Shift

As companies face continuous pressure to bring on diverse directors with current expertise in technology and cyber security, there are increasing indications that boards’ recruiting in response to that prodding has led to the first blush of a new generational shift on boards.

Several new data points show that there has been a ramping up of directors’ leaving board seats for various reasons. Sources say that much of that exodus has been made up of baby boomer directors who have reached or are approaching mandatory retirement age. Furthermore, as the remaining boomer board members see that a large portion of their peer group has left, more directors are likely to question whether they are still making the best possible contributions to the boards and companies they oversee.

According to exclusive data from SEC filings analyzer MyLogIQ, there were 772 directors from Russell 3000 boards who left board seats in the first three months of 2019 — the time of year when many decisions about board composition take effect — due to retirement, resignation, directors’ opting not to stand for reelection or other reasons such as medical leave. In 2018, the figure was 556, while the 2017 figure was 483. For a more granular breakdown of the data in this article, please visit our research vault.

Director Retirements Continue to Rise

Directors report that they are stepping down in order to support their boards’ aims to refresh the board composition. While mandatory retirement age is still a main driver of board turnover, some directors are leaving their board seats because it’s “simply the right time.”

Sandra Beach Lin, chair of the nominating and governance committee on the Wesco International board, informed the board last month that she would retire. Beach Lin has served as a director for 17 years, including 10 as nom-gov chair.

“I joined the board when I was in my forties, and so the mandatory retirement age of 72 wasn’t really a factor for me in this decision,” she writes in an e-mail. “I’m proud of the work that our nominating and governance committee has done to refresh the board and add members (i.e. one earlier this year and two others within the last five years), and we continue recruiting with that in mind.”

Special Fees for CEO Searches?

Given the amount of expertise, judgment and skill required in hiring a new CEO — to say nothing of time — special retainers for leading a CEO search or executive transition used to be de rigueur. But no longer.

A survey conducted by TheCorporateCounsel.net asking if boards had paid a special fee for serving on a CEO search committee received only 14 responses, and among that sample, only 7% reported paying directors a fee. In the same vein, a 2016 study conducted by Equilar found 15 boards that had paid special committee fees, and only one explicitly tasked the committee with CEO search responsibilities.

A look through director compensation disclosures using MyLogIQ’s SEC filings intelligence service shows that CEO search committees with special fees were more common a decade ago than in recent years. Comparative data is difficult to come by given that companies don’t hire new CEOs on a regular basis. However, overall the data appears to paint a picture of special CEO search fees going the way of the dodo.

FedEx Dodges Mandatory Retirement Bullet

Directors are paring down their board seats and opting not to stand for reelection or are alerting companies that they’ll be retiring or resigning, based on a review of recent filings. Directors at companies such as Exelon, Halliburton, Loews and J. Crew Group announced board departures this month, according to SEC filings analyzer MyLogIQ.

Meanwhile, the FedEx board on Jan. 28 announced it had amended its corporate governance guidelines so that its mandatory retirement age guideline would apply to only non-management directors, effective immediately. FedEx founder, CEO and chairman Fred Smith is 74 and would have been required to retire from the board after his 75th birthday. Instead, the board tweaked its guideline, and Smith will remain as board chairman. However, the board also announced that president and COO David Bronczek would join the board, effective immediately.

Caterpillar Backtracks On Split CEO/Chair Role

Caterpillar has named chief executive Jim Umpleby as chairman of the board, reversing the company’s decision to split the roles last year, reports The Wall Street Journal. Though corporate governance experts argue that oversight and decision-making is improved if the two roles are separated, this only happens at about 40% of S&P 500 companies, according to MyLogIQ. The leadership structure… Continue reading Caterpillar Backtracks On Split CEO/Chair Role

25 Companies That Pay Their Board of Directors a Shocking Amount

At one time, being a member of the board of directors of an S&P 500 company might have meant attending a few meetings a year, having some meals at the company’s expense, and scoring a nice stipend. Those days are probably over for most publicly traded U.S. companies as demands for board oversight have been… Continue reading 25 Companies That Pay Their Board of Directors a Shocking Amount