Tech Industry Board Director Compensation More Than Triple That of Financial Services Boards
– Financial Services Board Compensation Decreases by 10% –
– Compensation in the energy and real estate industries remains competitive while manufacturing and retail fall behind –
CHICAGO–(BUSINESS WIRE)– BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, released the findings of its annual board compensation study which tracks board compensation by industry, including energy, financial services, manufacturing, real estate, retail and technology. The study found that technology remains the most lucrative industry for board members, with compensation averaging $142,370. This is more than triple the amount of the lowest-compensated industry: financial services, where board directors receive an average of just $40,575 – a 10% decline from last year. Other industries examined include energy ($104,441), real estate ($94,455), manufacturing ($75,980) and retail ($67,733). The technology industry increased board compensation more than all other industries, while financial services had the largest decrease. Companies in the manufacturing and real estate industries also decreased compensation.
“The increase in board compensation in the Technology industry could be a result of the tremendous increase in the risk and responsibility board directors have taken on due to the financial crisis,” said Derrick Neuhauser, Chairman of the BDO Global Equity Team and Midwest Practice Leader for the Compensation and Benefits Practice at BDO Seidman. “While director compensation is down in some industries, we expect to see it rise across the board as we emerge from the recession and depressed equity values normalize. Higher compensation will also be necessary to support the greater workload and increased responsibility of board directors – a trend that started with Sarbanes Oxley and has been magnified in recent months.”
These findings are from the most recent edition of The BDO 300: 2009-2010 Survey of Board Compensation Practices of 300 Mid-Market Public Companies which examined the director compensation practices of publicly-traded companies with annual revenues below $1 billion in the energy, financial services, manufacturing, real estate, retail and technology industries. The study does not include compensation provided to directors for committee service.
Industry Rankings from The BDO 300 Mid-Market Board Compensation Study:
1. Technology The average annual compensation paid to board members of companies in the technology industry for fiscal year 2008/2009 was $142,370. Technology also had the highest increase in board compensation from last year compared to other industries. This value is comprised of 30% cash compensation ($42,325), 33% full-value stock awards ($46,991), and 37% stock option awards ($53,054). Technology companies use the highest percentage of equity and the smallest percentage of cash in their compensation plans compared to other industries. This is also the only industry that favors stock options over full-value stock.
2. Energy The average annual compensation paid to board members of companies in the energy industry for fiscal year 2008/2009 was $104,411. This value is comprised of 41% cash compensation ($42,301), 43% full-value stock awards ($44,624), and 17% stock option awards ($17,486). The cash compensation in the energy industry is relatively consistent with that of the other top three industries, while equity compensation is the real differentiator.
3. Real Estate The average annual compensation paid to board members of companies in the real estate industry for fiscal year 2008/2009 was $94,455. This value is comprised of 44% cash compensation ($41,978), 48% full-value stock awards ($44,899), and 8% stock option awards ($7,578). Companies in the real estate industry grant the highest proportion of full-value shares and one of the lowest proportions of stock option awards across all industries.
4. Manufacturing The average annual compensation paid to board members of companies in the manufacturing industry for fiscal year 2008/2009 was $75,980. This value is comprised of 49% cash compensation ($37,173), 39% full-value stock awards ($29,830), and 12% stock option awards ($8,977). Manufacturing companies decreased board compensation by approximately 6%.
5. Retail The average annual compensation paid to board members of companies in the retail industry for fiscal year 2008/2009 was $67,733. This value is comprised of 52% cash compensation ($35,023), 32% full-value stock awards ($21,796), and 16% stock option awards ($10,915). Retail board compensation follows a similar trend to the financial services industry – with compensation heavily weighted towards cash and light on the stock option awards.
6. Financial Services The average annual compensation paid to board members of companies in the financial services industry for fiscal year 2008/2009 was $40,575. This is the lowest compensation of all industries studied and also the largest decrease year-over-year at 10%. The total compensation value is comprised of 68% cash compensation ($27,393), 25% full-value stock awards ($10,184), and 7% stock option awards ($2,998). The study found that financial services companies have the greatest dependence on cash versus other industries, and the lowest percentage of stock option awards. Compared to last year, cash compensation was up by approximately 5% and equity was down by almost 30%.
About The BDO 300
The BDO 300 Mid-Market Board Compensation Study details director compensation practices of publicly-traded companies with annual revenues below $1 billion in the energy, financial services, manufacturing, real estate, retail and technology industries. The study also compares director compensation practices by revenue segment and business life cycle (introduction, growth, mature, decline). The study does not include compensation provided to directors for committee service.
About BDO Seidman, LLP
BDO Seidman, LLP is a national professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. Guided by core values including, competence, honesty and integrity, professionalism, dedication, responsibility and accountability for almost 100 years, we have provided quality service and leadership through the active involvement of our most experienced and committed professionals.
BDO Seidman serves clients through 37 offices and more than 400 independent alliance firm locations nationwide. As a Member Firm of BDO International, BDO Seidman, LLP serves multi-national clients by leveraging a global network of 1,095 offices in 110 countries. BDO International is a worldwide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity in its own country. The network is coordinated by BDO Global Coordination B.V., incorporated in The Netherlands, with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located.