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August 22, 2002
Directors' Pay Up 11 percent
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Directors of U.S. companies saw their compensation rise about 11 percent last year, according to a new study from Mercer Human Resources Consulting.

Mercer adds that directors can look forward to higher pay growth, even as they face greater scrutiny after this season of corporate scandals.

As for CEOs, their pay increased 6.9 percent, the smallest increase in at least a decade, to $7.04 million, according to Mercer, which polled 350 large companies.

Excluding stock options, annual pay for CEOs fell 2.8% to about $1.6 million in 2001, the study found.

The Los Angeles Times notes that accounting scandals at Enron Corp., WorldCom Inc. and other companies have put outside directors under increased pressure to ensure that executives aren't improperly boosting earnings to protect the value of their stock incentives.

Compensation for outside directors in 2001 was $115,687 in fees, options and other stock pay, up 11% from 2000. That's up 48% since 1997, as companies have given more options and stock to align directors' interests with those of investors. Median pay for outside directors exceeded $100,000 for the first time in 2000, rising 6.8% to $104,439 from $97,750 in 1999, and then surged last year, Mercer said.

The majority of board members are "becoming increasingly wary of the risks involved in board service," said Peter Oppermann, a senior executive compensation consultant at Mercer. "The current rash of problems will make it harder for companies to attract good directors in the future."

To view the Bloomberg News article, via the Los Angeles Times, click here.

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