Plush Seats With Plenty Of FringeElizabeth Lesly
Wanted: Distinguished person to serve on corporate board. Exl. benefits, generous pension, travel, all expenses paid. Just two hours a week! Pay up to six figures!
The pay of corporate directors is, according to shareholder activist Nell Minow of the Lens Fund, "the last dirty secret." Although Korn/Ferry International reports that directors work only an average of 103 hours a year, the average retainer--the base pay--has increased in recent years, to $20,929 in 1993. But there's much more (table).
Many companies also award directors extra stock options and hefty additional fees for chairing committees or attending meetings. And after just three years of service, many are awarded a generous
pension, which can double their pay as active directors.
BUSINESS WEEK took a look at the companies with the largest retainers, as tracked by Directorship Database. Former New Jersey Gov. Thomas Kean managed almost to triple the $50,000 base pay he got in 1993 at Amerada Hess. "We ask a lot," says a Hess spokesman, a widely shared response. At American Express, Richard Furlaud, who acted as chairman for five months last year, raked in an extra $212,384 worth of stock options for his trouble, on top of the $105,900 he was already getting as a director. Other AmEx directors did even better. Henry Kissinger hit the company with $350,000 in consulting fees.
At RJR Nabisco, controlled by Kohlberg Kravis Roberts, KKR partners hold 7 of the 11 outside board seats, paying $50,000. Plus, KKR pockets $10 million a year for "management, consulting, and financial services."
So what kind of pay do activist shareholders like? The one that Sandy Weill has enacted at Travelers: Directors get $75,000 in stock--no cash, no extra meeting fees, no pension plans.