More of the 200 largest US companies gave their directors perquisites for serving on boards in 2023 and 2024, according to a recent report on the director compensation disclosed in 2024 proxies from the National Association of Corporate Directors and Pearl Meyer. Such perks largely include charitable giving, travel benefits, and company products and services, the report shows.
Generally, compensation professionals advise boards only to offer directors perks that make business sense, help them do their jobs, or positively influence their reputation as scrutiny from investors and other stakeholders has heightened.
Some 54% of the largest 200 companies in the US provided perks to directors, up from the 53% reported in 2023, according to the report. Companies only have to disclose perks for board members if the aggregate amount exceeds $10,000, according to the SEC.
However, other boards are pulling back on perks, including small-, medium- and large-cap companies, the report noted. Overall, only 16% of 1,400 US companies in 24 industries the report studied offer perks to directors — down from 17% last year. The study focused on disclosures for the fiscal year ending between Feb. 1, 2023, and Jan. 31, 2024.
"From a governance perspective, outside the bare minimum, [perks] are generally frowned upon," said Ryan Hourihan, managing director with Pearl Meyer.
Indeed, some stakeholders are outspoken critics of perks for directors. For one, ISS considers it a problematic pay practice to offer directors retirement benefits or other perks. The Council of Institutional Investors (CII) believes directors should not receive perks "other than those that are meeting-related, such as air-fare, hotel accommodations, and modest travel/accident insurance." CII believes that other perks such as charitable giving "cross the line" and are "unnecessary."
Meanwhile, the SEC has brought several enforcement actions related to executive perks in recent years, and sources said boards should ensure that the perks for themselves don't run afoul of disclosure rules.
The most common director perk for the largest 200 companies is charitable giving or gift matching, with 48% of companies providing these, according to the NACD and Pearl Meyer report. Travel benefits for spouses are much less common, with 9% of the largest 200 companies providing them.
"Some of the most common perquisites I see for directors is accommodations to get to and from the [board] meetings in terms of travel and lodging," Hourihan said.
Some 6% of the largest companies also give directors company products, services, or other discounts. The least common category of perks for directors is insurance, which generally includes company-paid health or welfare insurance, at 4% of companies, according to the NACD and Pearl Meyer report.