A Piece of the Pie

Compensation experts say there is no such thing as a standard compensation package for outside directors of financial institutions. Even two institutions with equal assets may have wildly varying pay for their directors. Some pay only annual retainers and no meeting fees while others pay only meeting and committee fees and no retainers. Some pay chairmen more and others do not. Some, such as Citigroup, pay entirely in stock. While others, like Huntington Bancshares, pay no stock but a large offering of options.One trend that is certain, however, is that the amount of stock and option grants has nearly doubled among the nation`s top financial firms in the last three years. Consulting firm Willliam M. Mercer collected information from proxy statements about the top 50 financial firms. Its numbers show that, in 1997, the average stock grant was $26,248. A year later, the average stock grant was $33,113. And in 1999, the average stock grant was $44,035.Options have also nearly doubled. In 1997 the average option grant was $46,127. In 1998 it was $53,745. And in 1999 the average option grant to outside directors was $77,609.In truth, averages are deceptive, since some financial companies are large grantors of stock and others grant none at all. Much of the upward trend can be attributed to those companies that have historically granted stock and options as part of their directors` compensation package and have merely increased the amount. For example, Citigroup granted $100,000 worth of stock in 1997 and 1998 and raised that to $125,000 in 1999. The Bank of New York Co. issued $30,675 in stock in 1997 and more than doubled it to $69,600 in 1999. Fleet Financial Group tripled its stock grants from $10,000 in 1997 to $30,000 in 1999.Still, other companies, that had not previously granted stock, began to do so. Among them are Bank One Corp. which went from zero shares in 1997 to 30,000 in 1999. And American Express Co. and American General Corp. went from zero grants to about $20,000 and $30,000 respectively.Among the biggest grantors of options are those who do not grant stock, such as Chubb Corp. and Alleghany Corp., both of which issue around $150,000 a year in options to outside directors.Meanwhile, more good news is that large-bank cash retainers are either remaining steady or rising, with a few notable exceptions such as Mellon Bank Corp. where options are rising and fees are falling.Since most executives receive up to half their compensation from stocks and options, perhaps what they`re saying to their bosses in the boardroom is: Put your money where your mouth is.