Apple Directors Top Pay Heap; Some Other Companies Pay Much, Get Little
According to a report by Reuters, Apple (AAPL) has the second most highly-paid outside directors -- those that do not work at the company -- among publicly-held companies in the United States. In 2008, they received $633,000, or about $127,000 per meeting for the five board meetings they attended. But there are some other high tech companies whose director payments could raise far more questions.
The only company whose outside directors topped that number was Intuitive Surgical Ltd, which makes robotic healthcare equipment. Apple's stock has been going gangbusters, which might have something to do with the tremendous financial performance the company has shown in recent years. But it is also a number that sticks out when many companies are being criticized for their compensation practices.
Reuters undertook its analysis based on data in the Spencer Stuart Board Index, an annual study by the executive search firm. According to the study, the average director in high tech received $248,146, while the median figure was $223,015. So Apple is far off to the right end of the charts. But it's not the only company, so using the same study, which actually came out in October, I've put together a table of some other notable high tech outside director compensation figures, based on companies that paid $300,000 or more:
Notice that 88% of Apple director pay comes in the form of stock options, so unless the shareholders are doing well, the directors don't. Compare that to Akamai, with sales under a billion but with 83 percent of the director compensation of almost $319,000 in either cash or stock grants. So Akamai directors are guaranteed about $264,716, while Apple directors have a hard bottom line pay of just over $57,000. VeriSign is similar to Akamai, in that its net revenue was under a billion and 55 percent of the $325,675 outside director compensation was in cash or stock grants.
The compensation strategies are all over the map. IBM, with the highest revenue, isn't even close to the highest director compensation, and under half is in cash and no stock grants or options. Salesforce directors get higher compensation -- $435,424, compared to $364,266 -- and 87 percent is in cash and outright stock grants.
In fact, if you calculate outside director pay as a percentage of revenue, you get the following table:
From that view, Apple is a relative bargain and IBM is a steal. In comparison, such companies as Akamai, BMC, Citrix, McAfee, National Semiconductor, Salesforce, and VeriSign have to make you wonder what the directors are doing to warrant pay that high compared to revenue.
Image via stock.xchng user mihow, site standard license.