Pier One gives its directors a big raise…
One of the last filings to come over the wire on Friday was this proxy filed by Pier One (PIR), which according to the SEC, was filed at 5:22. As footnoted regulars know, anything filed late on a Friday almost certainly has something in it worth the time to at least skim and Pier One’s didn’t disappoint.
Although the economy is sputtering and many retailers are struggling, Pier One directors saw their personal wealth rise dramatically last year. Instead of the $33K annual retainer plus additional fees for various meetings that Pier One directors used to receive, they’re now getting $150K (the meeting fees have been eliminated). That hefty raise meant that several directors made nearly $100,000 more in fiscal 2008 than they did in 2007. For example, former IBM (IBM) executive, John Burgoyne made $186K last year as a Pier One director, compared with $87K the year before. And Terry London, who chairs the audit committee, received $194K in fiscal 2008, compared with $90K in fiscal 2007.
Remember that no matter how hard these directors worked, this is still a part-time job. And most of Pier One’s recent improvements have come in fiscal 2009. Indeed, even though the directors were paid more last year than the year before, they met a lot less — just five times for the whole board in fiscal 2008, compared with 12 times in fiscal 2007.
In the CD&A, the company lists comparable companies. It’s meant as a point of comparison for executive salaries, but it’s also handy when comparing director salaries. While I didn’t check all 20 companies listed, the four that I did look at — Abercrombie & Fitch (ANF), Ann Taylor Stores (ANN), Bed, Bath & Beyond (BBBY) and Brinker Int’l (EAT) all paid their directors substantially less — from $30K at BBY to $50K at Brinker.
Clearly, this is one part-time job that many people would line up for.
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May 12th, 2008 at 7:17 pm
Your analysis and conclusion might have been right up until SarBox, but it misses today’s reality. First, though, few if any companies want a director who joins the board because of the fees she’ll receive. And, because of so much more work now - not to mention liability - far fewer qualified people are interested in serving on more than one board besides their own company’s. The effect is to shrink the pool of qualified candidates.
Higher board fees is just an inducement to sway a potential director, but not a very effective one.
More & more standing CEOs are asking, “Why in the world would I want to be on another board?”
May 13th, 2008 at 4:01 pm
I agree that being a director now is a lot more difficult than it was in the past. But I still find it hard to believe that there’s not a lot of smart people who wouldn’t jump at the chance to make $150K a year (more once options are factored in) for what is still a part-time job. What’s also interesting is that Pier One provides no real explanation on the reasoning for raising the retainer nearly five-fold. If they were having difficulty finding directors willing to make $33K, then they should have said so. There’s also the point on why similar companies are paying far less for their directors. Are we really supposed to believe that serving on, say, Bed, Bath & Beyond’s board, is so much more desirable?
May 14th, 2008 at 5:34 pm
Bed Bath & Beyond’s ticker is BBBY. Best Buy is BBY.
May 15th, 2008 at 8:38 am
Thanks, James, for the correction, which I’ve fixed. As I’ve said many times before, everyone needs an editor!
May 15th, 2008 at 9:54 am
Jim get a life……LIF with an E
June 20th, 2008 at 3:07 pm
Pier One is not the only company whose directors have gotten a raise. Non-employee director pay at Fortune 500 companies increased by 7.2 percent from 2006 to 2007, rising from a median of $162,000 in 2006 to $173,640 in 2007. This includes annual retainers paid in cash or equity, as well as meeting fees. It does not include committee fees, additional fees paid to lead directors or sign-on grants for new directors.
It’s also noteworthy that the elimination of meeting fees is a trend across the Fortune 500. The prevalence of companies providing meeting fees declined from 57.4 percent in 2006 to 52.0 percent in 2007.