Director compensation is on the move up again.

Unlike the 1990s, this wave of raises isn’t due to a wild stock market. No, independent directors can pin their raises on the intensified microscope of corporate reform and proposed listing standards. Those translate into more time, more responsibilities and even more meetings. For that, according to New York-based compensation consultants Pearl Meyer & Partners, independent directors can expect their total compensation to increase 20% in 2003.

It’s still the best buy in America,” says Ed Archer, managing director at Pearl Meyer. Director pay had advanced nearly 11% annually in the 1990s but hit the skids with the scandal-ridden market. This year’s estimated raises are due mostly to increased demands on directors’ time and a transition to share-based compensation instead of options.



Pharmaceutical giant Pfizer (nyse: PFE – news – people ), which not only had to consider reform demands but also discuss its recently closed acquisition of Pharmacia, saw average retainer and meeting fees reach $67,000 in 2002 from $54,000 in 2001. Pfizer’s 24% jump is small compared to the 50% to 75% raises in annual retainers some companies are instituting.



For example, automaker General Motors (nyse: GM – news – people ) increased its annual independent director retainer 67% to $200,000 per year. While that may look like an outlandish raise, it’s actually not. Directors get only $60,000 in cash for their services–same as in previous years. The other $140,000 goes into restricted stock. Over five years, directors must own at least three times their annual retainer in stock. This plan replaces the 2001 structure that put $60,000 of the retainer into stock and included an annual grant of 3,000 stock options.



J.P. Morgan Chase (nyse: JPM – news – people ) switched to $175,000 in common stock equivalents from $85,000 in stock and options with a total initial exercise of $85,000. That’s on top of its $75,000 annual retainer.
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