Public Company Director Pay Grows Amid Rising Expectations and Responsibilities for Corporate Boards

NACD today published its annual Director Compensation Report, the industry standard for public company board pay practices, structures and trends.  

WASHINGTON, Feb. 3, 2025 /PRNewswire/ -- The National Association of Corporate Directors (NACD), the authority on boardroom practices representing 24,000 board members, has reported that public company director compensation levels continue to grow modestly. NACD's 26^th annual Director Compensation Report, produced in collaboration with leading compensation and leadership consultancy Pearl Meyer, shows that as boards' responsibilities and expectations continue to expand, median director pay for 2024 slightly increased by 3 percent, and overall compensation practices continued to align with governance standards and shareholder expectations.  

 The report presents key findings based on Pearl Meyer's research of director compensation trends and practices from 1,400 public companies across 24 industries. In addition to providing robust data, NACD's report also affirms the leading principles and best practices that all companies should consider when setting director compensation.  

 Key Findings from the report: 

• Total Direct Compensation (TDC) for directors has slightly increased by 3 percent over the prior year for all publicly traded firms. Micro companies (defined as having between $50 million and $500 million in revenue) had the largest annual increase at 10 percent TDC and experienced the greatest increase over the past several years. 
• The equity portion of TDC has steadily increased as the median director's pay mix is approaching a 60 percent equity and 40 percent cash split, with equity awards full-value shares and, less commonly, stock options) being the largest component of director compensation across public firms.   
• Audit, compensation and nominating/governance committee prevalence numbers remain consistent, and risk committees are on the rise. From 2014 to 2024, the prevalence of risk committees increased by 8 percent, while the number of other standing committees have evolved their agendas to meet the changing needs of companies. The percentage of companies delivering retainers to their audit, compensation, and nominating/governance committees also increased steadily, ranging from 76 to 88 percent in 2014, and from 87 to 91 percent today.
• Providing compensation for committee chairs remains a frequent practice. As the roles and responsibilities of boards and their primary committees have broadened, the need for additional, specialized committees has diminished, as oversight and governance functions have become streamlined under a more cohesive structure. This simplification and streamlining was similar for director compensation programs overall. 

Read the full report for additional insights into the most recent trends in director compensation at www.nacdonline.org.  

"Directors today operate in a complex and fast-paced environment that requires agility and adaptability. The commitment needed for board membership has increased significantly due to oversight of emerging risks related to economic uncertainty, along with oversight in areas of human capital, technology and cybersecurity," said Peter Gleason, NACD president and CEO.

"While year-over-year changes in board pay have been modest, the scrutiny boards face continues to increase," said Ryan Hourihan, managing director at Pearl Meyer and lead author of the report. "It's important for boards to understand how they compare to market practice to ensure their programs are competitive and capable of attracting the caliber of director expected by shareholders."

About the Pearl Meyer/NACD 2024–2025 Director Compensation Report:

Data presented in the 2024-2025 Director Compensation Report was collected through a study with Main Data Group of 1,400 companies across 24 industries that had filed a proxy statement or any other SEC filing containing director compensation information for the fiscal year ending between Feb. 1, 2023, and Jan. 31, 2024. The report assigns companies to one of five size categories based on revenue: micro ($50 to $500 million in revenue), small ($500 million to $1 billion in revenue), medium ($1-$2.5 billion in revenue), large ($2.5-$10 billion in revenue), and top 200 (200 largest companies in the S&P 500 based on revenue).

About NACD

The National Association of Corporate Directors (NACD) is the leading member organization for corporate directors who want to expand their knowledge, grow their network and maximize their potential. For more than 47 years, NACD has helped boards and the business community elevate their performance and create long-term value. Our leadership continues to raise standards of excellence and advance board effectiveness at thousands of member companies.

NACD's valued insights, professional development events and resources, such as the NACD Directors SummitTM and the NACD Directorship Certification® program, support boards in navigating complex challenges. With a growing network of more than 24,000 members across over 20 Chapters, boards are better equipped to make well-informed decisions on the critical, strategic issues facing their businesses today. Learn more at www.nacdonline.org.

About Pearl Meyer
Pearl Meyer is the leading advisor to boards and senior management helping organizations build, develop and reward great leadership teams that drive long-term success. Our strategy-driven compensation and leadership consulting services act as powerful catalysts for value creation and competitive advantage by addressing the critical links between people and outcomes. Our clients stand at the forefront of their industries and range from emerging high-growth, not-for-profit and private companies to the Fortune 500.  

Media Contacts:
Shannon Bernauer
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Teresa Osborne
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508-244-0821

SOURCE National Association of Corporate Directors