In a recent post on Boardmember.com, TK Kerstetter asks if directors of public companies are "still shy about giving themselves raises." According to Kerstetter, they are.
I think it is safe to say that many directors struggle on how to give themselves raises, even though almost everyone agree that the job of being a board member has become harder, requires longer hours, and is involves increasing risk all the time. While I was sitting at the conference thinking that there isn't much question about the need to address director pay in many companies, it struck me that it comes back to the same old concern: optics.
In Kerstetter's opinion, this shyness is unwarranted given the ever increasing responsibilities of public company directors. If director pay at a company is out of line with it's peer group, he says, then a reasonable increase is due and deserved.
My take is directors shouldn't be shy about giving themselves a raise if their compensation is out of line with markets and peers. In most companies added director compensation is a rounding error.
In the future, I think we’ll see more boards adjusting pay because some are really out of line, and as long as directors are reasonable, it won’t be an issue.
Yes, some greedy people have made it hard for the rest of us to do what’s right without worrying about optics, but in the end, most companies and CEOs themselves are overseeing this function well.
The full text of Mr. Kerstetter's blog post is available at: http://www.boardmember.com/blog_post.aspx?id=8589934601&blogid=473&ekfxmen_noscript=1&ekfxmensel=eeb11f83b_30_494