GREENSBORO–America’s largest public companies are shifting away from giving independent directors stock options and paying sharply higher premiums to audit committee chairmen, says an analysis by the Todd Organization.
The Greensboro-based benefits consulting firm found that at 255 companies with revenues of at least $5 billion, the average amount of non-employee director compensation actually declined slightly to $112, 698 in 2002 from $114,490 in 2001.
The report says the decline was caused by a 12.1 percent decrease in the average amount of stock option compensation directors received. The percentage of companies offering stock options to directors also declined to 52 percent in 2002 from 57 percent in 2001.
By contrast, during 2002, directors saw a significant increase, of more
than 17.4 percent on average, in more direct forms of stock compensation including outright grants of shares, as well as deferred, restricted, and phantom stock programs. The number of companies compensating directors with more direct forms of stock compensation rose 38.5 percent.
In 2002, there were 151, or 59 percent of the 255 companies that offered this compensation, up from 109, or 41 percent of the 255 companies in 2001.
There is also an increase in compensation for independent Audit Committee Chairmen. In 2002, 184 of the 255 companies paid an additional premium averaging $11,499 premium for Audit Committee Chairmen. This premium is a 41 percent increase from the average additional premium of $8,145 that 163 companies paid for non-employee Audit Committee Chairmen in 2001.
Many companies increased Audit Committee Chairmen compensation during 2002, in conjunction with the summer enactment of the Sarbanes-Oxley Act, the Todd Organization says.
Headquartered in Greensboro, North Carolina, The Todd Organization has 18 regional offices throughout the United States and was founded in 1957.
The Todd Organization