We have spent the last two weeks examining compensation paid to directors.  The information has only been available in recent years.  The Director Compensation Project is entirely student run and all of the posts are entirely student written. 

The accessibility of the information has significantly increased in recent years.  In 2006, the SEC reformed the disclosure requirements for executive compensation under Item 402.  For the first time, disclosure was required for "total compensation" paid to directors.  Some of the amounts, as the posts illustrate, are substantial. 

Marketwatch provided a list of the most highly paid directors, some of whom appeared in the Director Compensation Project.  Here are some of the conclusions from the article:

• More than a dozen public company boards had directors whose compensation averaged more than $500,000 in 2011. That is greater than the compensation of some S&P 500 CEOs - CEOs who work full-time while board members do not.
• In many other cases, the companies on this list have one board member who received an extremely large compensation in 2011. Often, these are former CEOs or other high-ranking executives who now serve as chairman, do part-time consulting work with their former employer or both.
• just because a company pays its board a lot does not necessarily mean it is excelling financially. Of the top 12 companies, six have lower stock prices compared to two years ago (as of June 4). Seven of the companies had lower profits in 2011 compared to the year earlier.

The article listed the 12 companies with the highest paid board of directors based upon the average compensation paid to directors.  These included:

• Chesapeake Energy:  Average Compensation: $533,163
• Freeport-McMoRan Copper & Gold:  $541,836
• Tyson Foods:  $542,013
• Alpha Natural Resources: $549,445
• Ball: $563,954
• Occidental Petroleum:$645,242
• Salesforce.com: $690,053
• Northrop Grumman: $696,717
• Oracle: $725,589
• Fidelity National Information Services: $849,691
• Amazon.com > Average Compensation: $898,993
• Hewlett-Packard > Average Compensation: $941,802

Averages can be skewed in either direction.  Some boards have directors who have only served a portion of the year and therefore bring the average down.  Others can have a director paid an amount much larger than the other directors, bringing the average up.  This might occur, for example, where the board pays the lead director additional compensation.

The report put out by Federic W. Cook & Co. Inc. on Director Compensation placed median total compensation among large cap companies (over $5 billion) at $225,000.  Moreover, the trend is likely upward.  As the report noted:  "we anticipate that director compensation levels may increase at more rapid pace over the next several years."  Id. at 4. 

The issue of director compensation will remain an important one.  Shareholder proposals have sought an advisory vote on the matter (say on director pay), with some receiving significant support.  A significant number (although not a majority) of shareholders casting votes supported such a proposal at Chesapeake Energy last year.  We on this Blog (particularly students) will continue to follow the issue and provide posts on Director Compensation.