Besides rising pay for directors, a recent study found that the proportion of S&P 500 companies with classified boards dropped by 8 percent last year, leading to the majority of those companies holding annual elections for all of their directors.

The 2007 Board Practices, Board Pay Study was conducted by Institutional Shareholder Services, a provider of corporate governance and proxy voting services. The report examines the board structure and compensation of boards of directors at S&P 1500 companies based on 2006 disclosures.

Director pay was up 12 percent, to an average of $160,493. The study pointed to a rise in cash pay levels and an increase in stock prices as fueling the value of equity awards.

The study also noted:

  • A disparity between fees paid to non-executive chairs classified as independent directors, compared to those who are affiliated with the companies they serve. Extra pay reported for the former group averaged $79,183, while the overall average for affiliated chairmen totaled $189,852.
  • A decline in the use of stock options as directors’ long-term compensation, balanced by the increased prevalence of restricted and deferred share awards.
  • More companies also disclosed stock ownership guidelines for non-employee board members. The proportion of study companies doing so rose to 37 percent, from 28 percent as of 2005, and is up to 56 percent at S&P 500 companies.

More study details can be found at

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