The 2011 Director Compensation and Board Practices Report

This report analyzes board structure and director compensation information for a sample of 334 public companies registered with the U.S. Securities and Exchange Commission (SEC) in 2011. Participants were asked to provide information based on corporate practices existing at the time of the survey compilation or, in some cases, based on disclosure provided to shareholders in proxy statements and other SEC filings regarding FY2010.

Part I of the report, “Director Compensation,” provides benchmarking information on the compensation awarded in FY2010 to individual members of the board of directors. In addition to total compensation figures, Part I offers details on cash retainers and incentive-related elements of a typical compensation package (including per-meeting fees, cash awards, and stock-option grants), as well as on amounts paid to a director for additional services. A section on compensation mix illustrates each element as a percentage of the total compensation value.

Part II, “Board Practices,” provides insight on an array of corporate governance practices—including board composition and leadership structure, the delegation of specific oversight or advisory functions to board committees, the system of director election used, the adoption by the board of antitakeover measures, and the frequency of board meetings. Special focus is dedicated to a select number of emerging practices, such as the role of the board in risk oversight and succession planning, board-shareholder engagement practices, the reimbursement of proxy solicitation expenses, and the use of secured web-based board portals to facilitate ongoing long-distance communications among board members. Finally, a section expands on executive compensation policies adopted by boards of directors: from the frequency of say-on-pay votes to the use of bonus banking, clawback provisions, and stock retention requirements.