Total Direct Compensation is up for Retail Boards – BDO Study

Board directors saw an overall 4 percent increase in total direct compensation (TDC) this year across industries, and retail boards contributed to that bump. According to The BDO 600: 2017 Survey of Board Compensation Practices of 600 Mid-Market Public Companies, retail boards saw an 8 percent increase in TDC.
Full-value stock awards (46 percent) and board retainers and fees (43 percent) made up a bulk of directors’ total compensation mix this year, trailed by stock options (6 percent) and committee retainers and fees (5 percent). Though the use of stock options as compensation increased slightly, full-value stock awards remain the preferred method of compensation.
Pay for retail board directors was the second lowest across the eight industries surveyed, yet still three times higher than pay for banking directors. Retail board directors received 47 percent of their compensation in board retainers and fees, while 44 percent came from full-value stock awards. Committee retainers and fees and stock options make up the rest of retail TDC at 5 percent and 4 percent, respectively. While TDC was up through FY 16, the retail compensation mix hardly changed, and remains close to a 50/50 split between fixed and equity compensation. This year, fixed compensation rose 1 percent to 52 percent, and equity stock compensation declined 1 percent to 48 percent.


Technology boards remain as the highest compensated among industries, averaging $219,484, and bank boards are compensated the least at $45,531. Despite the comparatively low compensation, banker TDC rose 15 percent compared to fiscal year 2015.
As boards are expected to be increasingly transparent on business dealings, and compensation remains closely linked to performance, finding appropriate compensation mixes will be a high priority for companies in the years ahead no matter the industry.
The BDO 600: 2017 Survey of Board Compensation Practices of 600 Mid-Market Public Companies explores how board compensation practices changed from fiscal 2015 to 2016.
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