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 the Humana Inc. (NYSE: HUM) 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

($)

Frank A. D’Amelio

130,000

154,999

0

11,406

296,405

W. Roy Dunbar

117,000

154,999

0

7,283

279,282

Kurt J. Hilzinger

302,000

154,999

0

27,072

484,072

David A. Jones, Jr.

129,000

154,999

0

25,788

315,072

William J. McDonald

123,000

154,999

0

28,765

306,764

William E. Mitchell

105,000

154,999

0

27,125

287,124

David B. Nash, M.D.

105,000

154,999

0

26,113

286,112

James J. O’Brien

105,000

154,999

0

27,397

287,396

Marissa T. Peterson

105,000

154,999

0

22,476

282,475

Bruce D. Broussard served as President and Chief Executive Officer and member of the Board of Directors. As an employee director, he did not earn compensation in connection with his service on the Board.

Director Compensation. During fiscal year 2016, Humana Inc. held 19 board of directors’ meetings. Each director attended at least 75% of the total number of board and committee meetings on which he or she served. All directors attended the 2016 Annual Meeting of Shareholders. Directors are reimbursed for expenses incurred from board service, including cost of attending board meetings.

Director Tenure. In 2016, Mr. Jones Jr. held the longest tenure as a member of the Board of Directors since 1993,. Mr. Broussard holds the shortest tenure, having joined in 2013. All but four directors sit on other boards: Mr. Hilzinger serves as a director for Oncobiologics, Inc. and National Seating and Mobility, Inc., Mr. Broussard serves as a member of the Board of Directors for America’s Health Insurance Plans, Mr. D’Amelio serves on the Board of Directors for Zoetis, Inc., Mr. Jones Jr. serves as a director for Connecture, Inc. and MyHealthDirect, Inc., Mr. Mitchell serves as a director for Veritiv, Inc., Mr. Nash serves on the board of Vestagen Specialty Textiles, and Mr. O’Brien serves as a director for Albermarle Corporation, Wesco International, Inc., and Eastman Chemical Company.

CEO Compensation. Mr. Broussard, Humana’s President and Chief Executive Officer earned a total compensation of $19,722,400 in 2016. He earned a base salary of $1,235,446, stock awards of $11,888,551, option awards of $4,370,743, non-equity incentive plan compensation of $1,973,624, and other compensation of $254,036. James E. Murray, Humana’s Executive Vice President and Chief Operating Officer earned total compensation of $6,722,630. He earned a base salary of $835,470, stock awards of $3,648,846, option awards $1,198,818, non-equity incentive plan compensation of $889,775, and other compensation of $149,721.