Sitting on a Board of Directors in Quebec: A $55,000-a-Year Occupation
Wednesday February 20 2008
Montreal, February 20, 2008 – The latest study on practices and trends in board administration and director compensation has revealed that the median compensation for board members of Quebec's medium-sized and large organizations is $54,714, up from $43,731 last year. The companies analyzed include the 50 largest publicly listed corporations in Quebec, with annual revenues exceeding C$300 million.
This figure includes an annual fixed amount, in cash or shares, plus director's fees and fees for sitting on one or more committees. Using the median figure provides a more accurate reflection of what is paid by many of Quebec's medium-sized businesses, since it is not influenced by the amounts paid by some larger corporations.
The median total compensation paid by companies that provide deferred stock units (DSUs1) or shares as compensation was $66,766, compared to $38,087 offered by those with no share-based compensation plan.
New trends
"Share ownership can play a part in aligning directors' interests with those of the shareholders they represent. We plan to devote further study to determining the reasons behind the significant gap between share-based and cash-only compensation," says Michel Nadeau, Executive Director of the Institute for Governance of Private and Public Organizations (IGPPO).
The mining and metals and transportation sectors offer the highest median compensation to their directors ($110,000 and $108,500, respectively). Financial services and industrial goods corporations are found at the other end of the scale ($44,500 and $32,000).
The median annual compensation paid to board chairs is $190,000. This does not include some 20 firms that do not offer compensation to the chair because the position is occupied by a company executive.
Other results
The representation of women on corporate boards did not change significantly in 2007. Women now hold 14% of directorships in Quebec. This figure is comparable to statistics for the rest of Canada and the United States. Nearly one board in six has no female members.
Quebec companies are increasingly seeking out directors with industry and global market expertise.
As for assessment practices, 60% of the companies interviewed formally evaluate the performance of their board chair, compared to 87% in the rest of Canada.
A full report on the findings of the study can be found online at the IGPPO (www.igopp.org) and the Spencer Stuart (www.spencerstuart.com) websites.
¹ Deferred stock units (DSUs) are payable upon an individual’s termination of service as a director. Each DSU is equivalent in value to one share.
About the Institute for Governance and Spencer Stuart
Established in September of 2005, the Institute for Governance of Private and Public Organizations (IGPPO) is a joint initiative of HEC Montréal and Concordia University (The John Molson School of Business) whose primary goal is to improve the understanding of governance practices in Quebec and Canadian companies. The Institute is a non-profit organization dedicated to coordinating research activities, undertaking intellectual initiatives, offering customized solutions, strengthening governance capabilities, building partnerships and promoting knowledge dissemination. The directors of the Institute represent an impressive cross-section of people from the financial sector, private-sector board members and academics. The board of the Institute is chaired by Dr. Yvan Allaire, Ph.D. (MIT), MSRC, a leading authority on corporate strategy and governance.
Founded in 1956, Spencer Stuart is the leading privately held, global executive search firm. We are the advisor of choice among top companies seeking guidance and counsel on senior leadership needs. We have unrivalled access to leading executives around the world. Our clients range across industries, from the world's largest companies to medium-sized businesses and entrepreneurial start-ups. Strong leadership — starting with the CEO and branching out to other key roles throughout the organization — is a key differentiator and critical to sustained growth and long-term shareholder value. The 10th annual Canadian Spencer Stuart Board Index, an analysis of the board composition and processes of 100 publicly traded Canadian companies with revenues exceeding $1 billion, begins with an examination of the role boards are playing in the areas of leadership and human capital development.