At a number of major American companies, compensation for board of director members has come under fire from shareholders in recent years. While director salaries remain a small fraction of CEO salaries (these are the highest paid CEOs at America’s largest companies), they have steadily risen over the past decade. In several recent instances, shareholders have even pursued litigation against — what they consider to be — excessive board compensation.
According to data from public company intelligence provider MyLogIQ, the average compensation of nonexecutive board chairpersons at Russell 3000 companies was $330,782 in fiscal 2018. At 18 public companies, the nonexecutive chair of the board made over $1 million.
At a public company, the board of directors is a supervisory body appointed by shareholders to act on their behalf and oversee the activities of management. The chairperson is chosen by the board and is typically responsible for setting the agenda and presiding over meetings. While some companies have combined CEO-chair roles, the majority of large corporations separate the two positions, maintaining certain checks and balances between the branches of corporate governance.
The 18 nonexecutive board chairs who were paid at least $1 million in 2018 represent just three industry sectors. Eight work in financial services, seven are in pharmaceutical and life sciences, and three work in industrial products.
Many of the highest paid nonexecutive board chairs also founded or previously acted as CEO of their companies. As investors continuously push for the separation of CEO and chairperson, many of these CEOs stepped down and took up board chairperson roles, preserving the institutional knowledge gained during their time in management.
In a January 2019 study, researchers found that in 2016, annual compensation of chairpersons who had previously served as CEO was $120,267 higher on average than compensation of chairs who had not served as CEO. Several people on this list, including Samuel Zell, Jorge Mas, and Steven Lund either founded or co-founded the company of which they are now board chair.
In addition to board chairs, other board members are also often well paid. And total board compensation can add up. Here are 25 board of directors with shocking pay packages.
Board Members Who Make More Than $1 Million
|Rank:||Company:||Board chair:||FY 2018 compensation:|
|1||NVR Inc||Dwight C. Schar||$17.7 million|
|2||Tesla, Inc.||Robyn M. Denholm||$6.9 million|
|3||Regeneron Pharmaceuticals Inc||P. Roy Vagelos||$6.3 million|
|4||MasTec Inc||Jorge Mas||$4.4 million|
|5||Equity Lifestyle Properties Inc||Samuel Zell||$4.0 million|
|6||Equity Residential||Samuel Zell||$3.2 million|
|7||Ashford Hospitality Trust Inc||Montgomery J. Bennett||$3.0 mllion|
|8||Webster Financial Corp||James C. Smith||$2.7 million|
|9||Equity Commonwealth||Samuel Zell||$2.3 million|
|10||Everest Re Group Ltd||Joseph V. Taranto||$2.0 million|
|11||Fidelity National Financial, Inc.||William P. Foley II||$1.7 million|
|12||Selecta Biosciences Inc||Omid Farokhzad||$1.4 million|
|13||First BanCorp||Roberto R. Herencia||$1.3 million|
|14||Nu Skin Enterprises Inc||Steven Lund||$1.3 million|
|15||Sage Therapeutics, Inc.||Kevin P. Starr||$1.1 million|
|16||Iovance Biotherapeutics, Inc.||Iain Dukes||$1.1 million|
|17||Bluebird Bio, Inc.||Daniel S. Lynch||$1.0 million|
|18||Surface Oncology, Inc.||Daniel S. Lynch||$1.0 million|
To determine the highest paid nonexecutive board chairpersons, 24/7 Wall St. analyzed total compensation for fiscal 2018 for all board chairs who were not also CEOs with data from public company intelligence provider MyLogIQ. Data on corporate governance also came from MyLogIQ. Only companies in the Russell 3000 index were considered.