Lead Director and Non-Executive Board Chair Pay

As companies and their Boards have worked to reform governance practices, more corporations are moving to establish independent leadership by electing either a Non-Executive Chair or a Lead Director.  An article in Equilar's January Newsletter highlights the results of a recent study examining the proxies of 443 public Fortune 500 companies to determine the prevalence of independent leadership and pay premiums.

Highlights from the study:

• In 2005, 76.1% of the companies studied disclosed the presence of either a Non-Executive Chair or a Lead Director, as compared to 70.8% in 2004.
• In 2005, among those companies with an independent Board leadership position, 22.3% had a Non-Executive Chair and 81.3% had at least one Lead Director.
• Among those companies disclosing the presence of a Non-Executive Chair, 72.0% paid a premium for service in this position in 2005 versus 65.6% in 2004.
• Pay premiums appear to be less prevalent for Lead Directors.  Among those companies disclosing the presence of a Lead Director, 38.0% paid a premium for service in this position in 2005 versus 28.8% in 2004.
• In 2005, median total compensation for a regular member of the Board was $150,000, for a Non-Executive Chairs was $219,765, and for Lead Directors was $162,424.