Board pay rises for middle market firms, while gender diversity remains low

28 November 2018

According to an analysis by accounting and consulting firm BDO USA, average board member pay has risen by 4% at mid-market public companies. Meanwhile, female membership lags, with only 15% reporting a female board director.

The annual ‘BDO 600: Study of Board Compensation Practices of Mid-Market Public Companies’ examines the compensation practices of 600 publicly traded companies in the energy, financial services, healthcare, manufacturing, real estate, retail, and technology industries. For the purposes of the study, the accounting and consulting firm defines the middle market as being firms with between $100 million and $3 billion in annual revenues for non-financial services industries. Mid-market financial services firms, meanwhile, have assets between $100 million and $6 billion.

The study found that board director compensation in the middle market increased by 4% between 2016 and 2017, rising from an average of $159,416 in 2016 to $164,609 in 2017. Equity-based pay comprised over half of compensation packages (54%), with firms greatly favoring the use of stock awards over stock options.

Meanwhile, the average board size was nine members, with 81% as independent directors. The median total fee for board members was $1.2 million, with the banking industry paying the lowest median fee and healthcare firms paying the highest fee.


Compensation package makeup

The study also revealed that two-thirds of firms surveyed had director stock ownership guidelines – with the average ownership value guideline at $298,119. “Institutional investors have stepped up pressure on companies to adopt stock ownership guidelines in recent years following high-profile corporate scandals,” said Tom Ziemba, a managing director in the Compensation and Benefits practice at BDO. “These guidelines are now a core governance principle in analyst assessments.”

BDO’s report revealed that gender diversity at mid-market public firms remains low, with only 15% reporting that they have a female director. "Board composition centered on diversity in thought and experience is becoming increasingly more important to the health of organizations,” commented Amy Rojik, National Assurance Partner and director of BDO’s Center for Corporate Governance and Financial Reporting. “In the case of gender diversity, this is transcending well beyond voluntary best practices into legislated requirements in places like California.”

“Many directors believe their board has room to grow on diversity, with still far too few using formal composition reviews to address the topic, and those companies may soon be left behind," she added.


Industry breakdown

Board member compensation varied widely among the surveyed industries, with banking continuing to offer the lowest average fees by far ($44,564), while technology remained in the top spot with an average fee of $230,408. Banking and energy were the only industries to register decreased director pay from 2016 to 2017.

Retail board members saw the biggest bump in pay (9%), while manufacturing directors saw the second largest increase at 6%. Technology and healthcare directors were the only ones to receive an average compensation package of over $200,000.

“Industry trends are a critical benchmark for setting pay, especially among middle market companies,” Ziemba concluded. “But it’s important to look through a variety of lenses when determining pay to ensure you attract talented board members and can justify pay practices to analysts, investors and other stakeholders.”

Meanwhile, a study from Korn Ferry found that real wages have actually declined for entry-level professionals and clerical workers over the last decade, despite record low levels of unemployment.


US tech consultancy Slalom to open Manchester office

19 April 2019

Slalom is on the move again, this time expanding its UK footprint. The American tech consulting firm has announced plans to open a Manchester office in which it will employ 200 staff by 2025. The firm, which opened a London office in 2014, was formerly known as Slalom Consulting until a 2015 rebranding.

The announcement of the Manchester move follows a January relocation of its more than 700 Chicago-based employees from its office in Chicago’s Prudential Plaza to Aon Center, the third-tallest building in the city. Slalom’s previous space at Prudential was separated between floors, causing inconvenience. The new space at Aon is a marked improvement, in addition to the sheer size difference, with the move nearly doubling the firm’s floor space. The space will also utilize hoteling (scheduled workspaces), project-based workspace, and flexible areas for events and education. Slalom also expanded into Canada in 2016, opening an office in Toronto.

Paul Squire, managing director of Slalom’s London location, will head up the Manchester office. “I’m excited about working with our clients in the North West of England, helping them to deliver people-centric change, bring strategic solutions to life, and ultimately, to love their future,” he said.

Slalom has been one of Fortune 100’s “Best Companies to Work For” for four consecutive years, and has partnerships with powerhouse organizations including Amazon Web Services, Google Cloud, Microsoft, Salesforce, and Tableau. It employs more than 6,500 people in 29 offices across North America and the UK.US tech consultancy Slalom to open Manchester office“Manchester is a city of digital enterprise with a wide range of strengths across industries including manufacturing, healthcare, utilities and consumer services; which perfectly complements Slalom’s breadth of expertise,” Dave Williams, UK Country Managing Director, said. "We're looking forward to collaborating with clients to shape their internal capabilities, building a team and investing in the local community."

“Greater Manchester is a hotbed for collaboration and innovation, making it the ideal location for pioneering businesses like Slalom. There are strong complementarities between Slalom and Greater Manchester’s efforts to collaborate with companies going through digital transformation and supporting them to grow within the region. Establishing operations within one of Europe’s largest digital and technology clusters will provide the consultancy firm with ample opportunities to join forces with the rapidly increasing number of world-leading brands that are choosing Manchester,” Tim Newns, chief executive of Manchester’s inward investment agency, added.

In December 2018, the firm launched Slalom Build, a software and tech product “Build-as-a-service” offering that enables companies to build cloud-native software and tech products. While Slalom is headquartered in Seattle, Slalom Build centers can currently be found in Boston, Charlotte, Chicago, Denver, and Toronto.