Total pay for outside directors at the largest U.S. companies increased modestly over the past year, fueled by faster growth in the cash components of director compensation, according to Towers Watson’s latest annual analysis of director pay trends among the Fortune 500. Pay for directors increased 3% at the median in this year’s study. While increases in director pay in the early years of this decade were primarily driven by the rising value of equity, this year’s pay increase was driven by growth in cash compensation as companies continue to adjust the balance between cash and stock.

For our new analysis, Towers Watson’s Executive Compensation Resources unit reviewed director pay levels and practices among 469 Fortune 500 companies that filed proxies prior to June 30, 2013. We then compared that data with findings from our 2012 report to identify trends in director pay programs. (For last year’s analysis, see “Fortune 500 Director Pay Continues to Evolve to Reflect the Changing Role,” Executive Compensation Bulletin, October 23, 2012.) Among the key findings from our 2013 analysis:

  • Total direct compensation for outside directors increased 3% at the median over the prior year. The typical Fortune 500 director receives almost $227,000 in total direct compensation, up from about $220,000 in last year’s study.
  • The median value of total cash compensation increased 8% over the last year, while median stock compensation remained flat. The increase in total cash fees was driven primarily by increases in annual cash retainer values as well as the continuing shift toward flat, retainer-based committee compensation and away from more variable forms of pay, such as per-meeting fees.
  • Compensation committee members received a pay bump due, in part, to the additional time and effort required for service on this committee. The median retainer paid to compensation committee members increased 25% last year and now equals what audit committee members receive ($10,000).

    For more details of our findings, download our Executive Compensation Bulletin by clicking on “Download PDF” above or below. Click here for the press release on our findings. 


    Michael Bowie 

    Michael Bowie

    Towers Watson Arlington

    Michael Bowie is a senior analyst in Towers Watson’s Executive Compensation Resources unit in Arlington, Virginia. Email or