Director compensation levels continue to increase

OTTAWA, March 10, 2016 /CNW Telbec/ - Compensation levels for chairs and board directors of publicly traded companies increased from an average of $128,851 in 2012 to $136,506 in 2014, according to The Conference Board of Canada's updated Canadian Directors' Compensation Practices.

"Despite the recent economic downturn, we expect director compensation to continue to increase at a pace faster than the economy or worker wage growth. However, the increase in compensation comes with greater demands and workload," said Lynn Stoudt, Vice-President, Leadership and Human Resources Research with the Conference Board. "This reflects the increasing level of professionalism required of the director role, and the ever-increasing scale and scope of director responsibilities."  

HIGHLIGHTS

• Board of directors compensation levels continue to increase, from an average of $128,851 in 2012 to $136,506 in 2014.
• The proportion of women on boards has increased slowly but steadily over time. However, many boards continue to have only one female director, while others still have no female directors.
• Board chairs are increasingly independent and are rewarded with higher compensation than directors.

Director compensation varies broadly across the size of organizations. Large companies pay their directors the highest average annual total compensation at $156,374. Interestingly, small companies pay their directors more than medium sized- organizations, on average $126,893 and $118,796 respectively. The average annual compensation for board chairs is $257,848. Overall, Canadian organizations paid an average of $1,657,118 in fees to their board of directors in 2014.

By industry, the communications and telecommunications sector pays the highest annual total fees to its board of directors while the manufacturing and construction industry pays the lowest average fees.

The report also finds that board diversity is increasing at a very slow pace. The percentage of women on Canadian boards of directors grew only modestly from 13 per cent in 2012 to 16 per cent in 2014. Moreover, only 38 per cent of publicly traded boards have more than one female director. Publicly traded companies continue to lag Crown corporations and privately held organizations on women representation on boards.

This slow progress on board diversity can be explained in part by the lengthy tenure of directors (an average of nine years) and the lack of retirement policies for boards in Canada. These factors result in a gradual pace of change.

Board independence continues to move in the right direction, with over three-quarters of directors from sampled companies being independent. Furthermore, 86 per cent of boards separate the role of CEO and Board Chair, which is the highest proportion of independent chairs seen since 2006.

In its fourth decade of publication, Canadian Directors' Compensation and Board Practices summarizes data from 247 publicly traded Canadian companies. The data sources used in this report are from Equilar, an executive compensation and corporate governance database. 

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SOURCE Conference Board of Canada

Yvonne Squires, Media Relations, The Conference Board of Canada, Tel.: [phone] ext. 221, E-mail: [email protected]; or Juline Ranger, Director of Communications, The Conference Board of Canada, Tel.: [phone] ext. 431, E-mail: [email protected]