US company directors compensated more than ever, but now risk backlash

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It's nice work if you can get it.

The average annual compensation for non-executive directors at S&P 500 companies rose 2 percent to US$304,856 last year, topping US$300,000 for the first time and 43 percent higher than it was 10 years ago, according to a new report released by executive headhunters Spencer Stuart.Directors at biotechnology company Regeneron Pharmaceuticals Inc received, on average, US$1.2 million in compensation last year.

As a result, more companies are expected to put these matters to a shareholder vote at company annual meetings, said Paul Hodgson, a compensation expert and senior adviser at ESGuage, a corporate governance data and analysis firm."There's a certain amount of nervousness within companies about what they're paying directors," Hodgson said."More attention is being paid to outliers than in the past.

A director may visit company factories and offices, read and comment on background papers, and is often involved in board committee work. Regeneron director Christine Poon, for example, participated in 21 meetings last year, including 10 as chair of the compensation committee. And directors at fashion company Ralph Lauren Corp received nearly all of their pay in cash in 2018, and made a lot less than their peers, pulling down just US$107,299, according to Spencer Stuart. At some companies, there is a delay in directors receiving the full benefit of their service. That is the case at Goldman, whose directors don't receive shares from their restricted stock grants until they retire.

"The quality of our board is unparalleled – over half our directors are members of the National Academy of Sciences and two of our directors are Nobel laureates," said Regeneron spokeswoman Alexandra Bowie when asked about the compensation Pharmaceutical company Incyte Corp , whose board members made an average of US$493,657 in 2018, also re-evaluated the way it structured directors' compensation after getting investors' push back.

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