Directors at corporate giants like General Electric, Goldman Sachs and Compaq Computer have seen the value of their compensation fall this year, at least on paper, by tens of thousands of dollars, according to Pearl Meyer, whose estimate of a typical director's compensation includes a value placed on the stock or stock options doled out. In addition to paying directors their retainers in cash or stock, many companies have moved to stock options. Hewlett-Packard made the awards as part of its overall effort to link pay to performance, a company spokesman said, and to remain competitive in paying directors. Companies have long expected directors to own some shares, but the push to compensate directors with some form of stock came about over the last decade. It stemmed from a desire to align their interests with those of shareholders.
Some companies still rely largely on cash.
Their relatively small equity stakes put them among the lowest-paid directors of the large companies evaluated. The directors, all of whom own some company shares, have the option of taking their pay in stock, said Jerry Nix, the chief financial officer of Genuine Parts, and some have done so. Only one-fourth of the 72 companies reviewed have chosen to give directors more equity this year. But the increase in equity as a form of compensation has led to six- figure pay packages for many board members in the last few years. At the high end, the figures can be stunning.