Public Company Board Service Can Mean Lots of Work and Risk

by Gwen Moritz  on Monday, Aug. 18, 2014 12:00 am  

There was a time, in those halcyon days when Enron and Arthur Andersen still existed, when getting elected to the board of directors of a publicly traded company was seen as a cushy way to make some sweet extra cash and take some nice trips in exchange for voting to do whatever the chairman wanted to do.

Those days ended long ago, and these days the job of a director can sound like anything but a boondoggle. In fact, some directors are getting the corporate equivalent of combat pay.

“Since November 2011, the Audit Committee has been conducting an internal investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practice Act of 1977 … and other alleged crimes or misconduct in connection with foreign subsidiaries …,” Wal-Mart Stores Inc. reminded investors in its most recent proxy statement issued in April. That committee “conducted 13 additional meetings related to the investigation and compliance matters” during the fiscal year that ended Jan. 31, and “members received frequent updates via conference calls and other means of communication.”

That’s why members of the audit committee are being paid an extra $75,000 a year, and committee chairman Christopher J. Williams was paid an extra $100,000, pushing his compensation for board service to almost $385,000 for the year. Williams, the chairman and CEO of The Williams Capital Group LP of New York, did not stand for re-election when his term ended in June.

Williams was the highest paid Wal-Mart director last fiscal year, but he wasn’t the highest paid corporate director in Arkansas. That designation belongs to Claiborne Deming, chairman of Murphy Oil Corp. and an independent director now that his service as CEO is long past. Deming, a member of the founding Murphy family, was paid $450,000, split almost evenly between cash and stock.

Murphy Oil directors, in fact, were the best-paid, with all independent members earning $300,000 or more except the one, T. Jay Collins, who joined the board halfway through the year. Directors of its spinoff, Murphy USA Inc., were paid at least $157,000 last year, although their service didn’t officially begin until the spinoff was complete in August 2013.

Over the past decade, the Securities & Exchange Commission has demanded more independence from directors and saddled them with more legal responsibility, even those that aren’t the biggest company in the world or facing a multiyear federal investigation.

“There’s a whole lot of reputational risk, and the directors are working a whole lot harder than they ever have,” Joseph Sorrentino, a managing director with Stephen Hall & Partners, an executive compensation consulting firm in New York, said in a recent interview with Arkansas Business.

Sorrentino was interviewed specifically about the recent decision by the board of Bank of the Ozarks Inc. to revamp its executive compensation plan, but some of his comments referred to corporate directors generally. “It’s not the country club job that everyone thought it used to be,” he said.

The List

This week Arkansas Business lists the members of the boards of directors of 19 publicly traded companies headquartered in Arkansas and compiles their compensation for that service, broken down as cash and equity awards or options.

More: Download the complete list of Arkansas public company boards and directors (PDF).

The list also includes shares held by each director as of the date of each company’s proxy statement and the value of those shares when multiplied by the closing price on Friday, Aug. 8.

All directors who were compensated by the company during the most recent fiscal year are included on the list, although some, like Williams at Wal-Mart, have since left the board and are described as former directors. Directors who are considered independent as defined by the SEC — mainly those who aren’t also in executive roles — are designated with an asterisk.

Directors who are also employed as executives are listed and their stock holdings are calculated, but they generally are not compensated specifically for board service.

 

 

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