More Firms Requiring Ownership by Non-employee Directors

November 30, 2007 ( - In 2006, 72.6% of Fortune 250 companies reported the use of ownership guidelines for non-employee directors, according to Equilar, provider of executive compensation benchmarking solutions.

Equilar’s latest issue of Executive Compensation Trends reports this is an increase from 2005, when 68.5% of Fortune 250 firms disclosed director guidelines, according to a press release.

Among Fortune 250 companies with ownership guidelines for directors, 90.3% disclose the amount of time directors have to achieve target ownership levels, and the amount of time given to directors ranges from one to six years, with a median of five years to meet the guidelines. In 2006, 25.1% of Fortune 250 companies with director guidelines disclosed the compliance status for directors, and none reported a director in breach of ownership guidelines, the release said.

The report also includes internal pay equity trends at S&P 500 companies, Equilar said. Key findings include:

  • In 2006, total compensation packages for S&P 500 CEOs represented a median of 2.96 times more than the median pay package for all other named executive officers (NEO). In 2005, the same pay multiple was 3.10, indicating that the disparity between CEO pay and median NEO pay levels narrowed in 2006.
  • CEOs at S&P 500 companies earned a median of 2.97 times more in total compensation than their CFO counterparts in 2006. The average total compensation multiple between CEOs and CFOs at S&P 500 companies was 3.75.

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