Board of Directors pay continues to rise at a rapid pace, according to a study published by Total Compensation Solutions ("TCS"). Total cash compensation for the role of board chair and the role of lead director in the financial services industry is out-pacing all others.

However, when total cash compensation and equity grants are combined, the insurance industry has the highest average compensation for board chair and regular board members, according to TCS.

Overall, board chairs are receiving increases of approximately 10.5 percent per year.

These observations from TCS were based on its analysis of 1,278 public documents showing board of directors' compensation practices in 2017.

The annual study, which TCS has conducted since 2005, revealed that increases for the role of board chair have outpaced inflation for the last 10 years. These increases have been in the eight percent to 10 percent range over that period and reflected the impact that changes in regulation have had on the time commitment required of the chair position. According to TCS, this also reflected the impact of various "watchdog" groups that continually challenge the compensation and governance of today's boards.

The study also revealed that 76 percent of the companies in this year's survey offered stock compensation to their board members. Almost 60 percent of these companies had minimum share holding requirements for board members to tie their gains to those of other shareholders. The combination of cash compensation and stock compensation added up to a significant compensation package for the board members overseeing some of the largest companies in the United States, TCS found.

The 2017/2018 board of directors compensation report revealed the compensation and governance practices of publicly traded companies in multiple industry groups (insurance, banking, biotechnology, consumer goods, energy, financial, health care, leisure, media, technology, and transportation). TCS compiled data on these companies in late-2017 for use in the 2018 proxy season.

Tom Bailey, project director and author of the study, noted several additional points, including:

- 37 percent of the companies combined the role of board chair and chief executive officer despite guidelines from shareholder groups. This was a modest reduction from previous studies.

- 42 percent of the companies reported having a lead director and there was a strong correlation to companies with combined chair/chief executive roles and the lead director position.

"There continues to be an increase in the amount of time the chairman and other board members are spending on board related responsibilities" Mr. Bailey noted. He added: "There appears to be greater reliance on retainers to compensate board members especially in the finance and insurance industries for this additional time commitment between formal board meetings."