This post is part of an ongoing series that examines the way stock exchange independence rules relate to director compensation. We are for the most part including companies from 2017’s Fortune 500 and using information found in their 2017 proxy statements.

NASDAQ and the NYSE have similar rules with respect to director independence. NYSE Rule 303A.01 requires that each listed company’s board of directors be comprised of a majority of independent directors. A director does not qualify as “independent” if he or she has a “material relationship with the company.” NYSE Rule 303A.02(a). In addition, the director is not considered independent under NYSE Rule 303A.02(b)(ii) if the director received more than $120,000 in direct compensation, other than director’s fees, during any of the previous three years. The NYSE imposes a higher independence standard for directors serving on the company’s audit committee by requiring them to comport with Rule 10A-3 (C.F.R. §240.10A-3) (see Rule 303A.06) and requires consideration by the board of directors of certain specified factors in designating directors for the Compensation Committee. See NYSE Rule 303A.02(a)(ii).

Finally, as the Commission has noted with respect to director independence:

All compensation committee members must meet the general independence standards under NYSE’s rules in addition to the two new criteria being adopted herein. The Commission therefore expects that boards, in fulfilling their obligations, will apply this standard to each such director’s individual responsibilities as a board member, including specific committee memberships such as the compensation committee. Although personal and business relationships, related party transactions, and other matters suggested by commenters are not specified either as bright-line disqualifications or explicit factors that must be considered in evaluating a director’s independence, the Commission believes that compliance with NYSE’s rules and the provision noted above would demand consideration of such factors with respect to compensation committee members, as well as to all Independent Directors on the board.

Exchange Act Release No. 68639 (Jan. 11, 2013); see also Exchange Act Release No. 68641 (Jan. 11, 2013).

Independent directors are compensated for their service on the board. The amount of “total compensation” can be seen from examining the director compensation table from Archer Daniels Midland Company’s (NYSE: ADM) 2017 proxy statement. According to the proxy statement, the company paid the directors the following amounts:

Name

Fees Earned or Paid in Cash

($)

Stock Awards

($)

Option Awards

($)

All Other Compensation

($)

Total

($)

Alan L. Boeckmann*

0

275,000

0

20,000

295,000

Mollie H. Carter*

0

275,000

0

0

275,000

Terrell K. Crews

145,000

150,000

0

2,800

297,800

Pierre Dufour

125,000

150,000

0

0

275,000

Donald E. Felsinger*

30,000

275,000

0

25,700

330,700

Antonio Maciel*

125,000

150,000

0

0

275,000

Patrick J. Moore

140,000

150,000

0

0

290,000

Francisco J. Sanchez

125,000

150,000

0

0

275,000

Debra A. Sandler*

81,731

98,077

0

10,000

189,808

Daniel T. Shih

125,000

150,000

0

0

275,000

Kelvin R. Westbrook

145,000

150,000

0

10,700

305,700

* Mr. Boeckmann, Ms. Carter and Mr. Felsinger each elected to receive his or her entire annual retainer in the form of stock units. Ms. Sandler was elected to the board of directors on May 5, 2016. Her period of service during 2016 was used to pro-rate the annual non-employee director compensation. Ms. Carter and Mr. Maciel did not stand for re-election, and only one nominee, Suzan F. Harrison, was selected to fill the vacancies, reducing the number of independent directors to ten. All other compensation includes charitable gifts pursuant to ADM’s matching charitable gift program and personal aircraft use.

Director Compensation. During fiscal year ending on December 31, 2016, ADM held nine board of directors’ meetings, and the independent directors met separately at regularly scheduled executive sessions. Additionally, the Audit Committee met nine times, and the Compensation/Succession and Nominating/Corporate Governance committees each met six times. Each current director attended at least 75% of all meetings of the board and committees on which he or she served. The non-management directors met in independent executive sessions four times during fiscal year 2016. All director nominees standing for election at the last annual stockholders’ meeting held on May 5, 2016, attended that meeting. Non-employee directors receive an annual retainer of $275,000 with $150,000 being paid in stock. In addition, the Lead Director received a stipend of $30,000, the chairman of the Audit Committee received a stipend of $20,000, the chairman of the Compensation/Succession Committee received a stipend of $20,000, and the chairman of the Nominating/Corporate Governance Committee received a stipend of $15,000. Directors are not paid fees for attendance at board and committee meetings, but are reimbursed for out-of-pocket traveling expenses incurred in attending board and committee meetings.

Director Tenure. Ms. Carter is the longest serving director, having served since 1996, but did not stand for re-election. Ms. Sandler is the shortest serving director, having joined in 2016, and is a director of Gannett Co., Inc.. Mr. Boeckmann is a director of Sempra Energy and BP p.l.c.. Mr. Crews is a director of WestRock Company and Hormel Foods Corporation. Mr. Dufour is a director of Air Liquide S.A. and National Grid plc. Mr. Felsinger is a director of Northrop Grumman Corporation and Gannett Co., Inc.. Mr. Luciano is a director of Eli Lilly and Company and Wilmar International Limited. Mr. Moore is a director of Energizer Holdings, Inc.. Mr. Westbrook is a director of Stifel Financial Corp., T-Mobile USA, Inc., and Mosaic Company, and trust manager of Camden Property Trust.

CEO Compensation. Mr. Luciano, Chairman of the Board since January 2016, Director since 2015, Chief Executive Officer and President since January 2015, President and Chief Operating Officer from February 2014 to December 2014, and Executive Vice President and Chief Operating Officer from 2011 to February 2014, earned a total of $14,012,616 in fiscal year 2016. He earned a base salary of $1,283,340, stock awards of $5,312,218, option awards of $5,279,331, non-equity incentive plan compensation of $1,939,600, change in pension value and nonqualified deferred compensation earnings of $49,419, and other compensation of $148,708. Mr. Young, Executive Vice President and Chief Financial Officer, was the second highest compensated executive at ADM. He earned a total of $5,620,923 in fiscal year 2016. He earned a base salary of $825,048, stock awards of $1,979,220, option awards of $1,966,968, non-equity incentive plan compensation of $794,116, change in pension value and nonqualified deferred compensation earnings of $32,419, and other compensation of $23,152. Other compensation included costs for personal use of company aircraft, imputed value of company-provided life insurance, executive health services, and company contributions under the 401(k) and Employee Stock Ownership Plan.