While I haven't written about the topic on this blog, I have been a very strong critic of Boards of Directors and their general lack of accountability over time.
While that statement is very broad and full of exceptions, my personal opinion of boards, in general, is skeptical at best. Although most large, publicly traded corporations' directors are very successful and well regarded, there is appearance of a lack of accountability. CEOs are fired, managers are fired, but directors are rarely put out, except by activist investors, like Carl Ichan. Find Premium Finance Jobs on Doostang. Start Now! www.Doostang.com
While working about 223 hours a year, directors usually make about $30,000+ in retainers and much more in stock, as well as "meeting fees" for an average of $119,164. Not bad work, if you can get it. RingCentral Online - Free Trial plus 10% Off
However, according to the Wall Street Journal, in an article titled, "More Directors are Cutting Their Own Pay," some boards seem to have gotten the egalitarian bug!
According to the article, GM, Ford, Eddie Bauer, and Herman Miller, to name a few (out of 43), have agreed to reduce their compensation. While this is a good start, it may be a false comparison, as:
"The pay cuts follow recent increases in overall compensation for individual directors...total median director compensation rose 12% to $119,164...It was the third straight year of double digit increases."
Seems like these folks have been doing pretty well, despite the disastrous years the major automakers have seen. However, I must give credit where credit is due. The directors at GM: "...recently cut their pay for the third time in four years...," but, "...revived their full retainer in 2008." However, with the bailout money, they reduced their retainers to $1.
Ford seems to have done a little better: "...directors gave up the $40,000 cash portion of their annual retainer, as well as payments for committee chairmen." So maybe, maybe, boards are beginning to see that even they, the ones who are supposed to supervising the executives, are part of the rise and fall of the company. Perhaps reducing director compensation is a pointless exercise for companies that are billions in the hole, but it does demonstrate accountability.
Although I would like to end this on a high note, the Journal article speaks of an unnamed company and an unnamed director, who, on being asked to reduce his compensation, demurred, as his compensation for 223 hours of work is "...an important part of my income."
I guess if you make the US gross median income of $50,740 and lose your only job, its not as important as that director's income. How's that for accountability?!