Director Compensation

hrbanker

Our company has gone through a few rough years and our directors voluntarily waived compensation until we again became profitable. Now we are ready to begin that compensation again and are trying to determine a fair but reasonable compensation.

Given the recent criticism of compensation in some companies, we are looking for guidance. Is there a trend to reduce director compensation? What about stock options for directors...any planned changes?

Any help you can offer is most appreciated.

hrbanker

Petard

The demands on public companies' boards are increasing because of the new regs and heightened scrutiny they may face from investors and analysts (not to mention reporters if you are a high-profile institution). The directors will have more work--almost like a real job--and more pressure. Most of the literature I've seen suggests that BOD compensation will be increasing over the next few years. It will be more difficult to find qualified individuals who are willing to take on the new demands, risks, and responsibility.

Assuming you have shares available for grants, stock compensation or options certainly could be a good strategy to supplement BOD pay. Although the accounting advantages may be dwindling, stock options align recipients with your investors' interests, and options may help you conserve cash while you're working on your financial recovery.

Good luck!