Board of director compensation mixed bag at midstate companies

Nineteen of the midstate’s public companies combined to pay out about 6 percent less to their boards of directors in 2014 than they did in 2013, bucking a nationwide trend that has seen director compensation rise, experts said.

The midstate companies paid almost $20.6 million in compensation for their directors in 2014, down from $21.88 million in 2013, according to data the Business Journal compiled from proxy reports.

“There is more being asked of these directors every year,” said Louis Taormina, a principal at New York City-based Frederic W. Cook & Co. Inc., a consulting agency that works with corporate boards and publishes a yearly report on director compensation. The 2014 edition, published in October, showed rising compensation rates in four of five major industries.

“That’s one of the major trends we’ve seen in director pay,” he said. “There is a greater workload, more meetings, longer meetings, and it’s resulted in a push for compensation to increase.”

2013 vs. 2014

Array

Local companies experienced a significant anomaly in 2013 that inflated compensation statistics for that year.

Due to some large stock awards, Select Medical Holdings Corp. of Lower Allen Township paid out $2.44 million in compensation in 2013 — including $1.85 million to two directors.

In 2014, the company fell back closer to the norm and paid out about $1.27 million, including about $252,000 to the same two directors, William H. Frist and Thomas A. Scully.

If Select Medical had paid in 2014 what it paid in 2013, midstate director compensation overall would have been about even year-to-year, instead of falling.

Eleven of the 19 midstate companies saw increases for board pay in 2014.

“In the last five or six years, many companies were hesitant to review director compensation, even though they could have been working as hard or harder than they ever did before,” Taormina said. “As things have stabilized, there is more of a willingness to revisit director compensation.”

Michael Sadowski

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