A seat on the best-paid corporate boards in the plastics industry can bring in $50,000-$60,000 a year, plus stock options and extras like fees to attend board meetings and travel reimbursements. Sitting on the lowest-paid boards, by contrast, means less than $10,000 a year, plus stocks and extras.
That kind of variety can be expected in an industry with a tremendous range in company size, from relatively small $50 million-a-year operations to multibillion-dollar multinationals.
An examination of compensation to boards in the plastics industry shows that most are in the middle, paying from $20,000 to the mid-$30,000 range.
Hexcel Corp., for example, pays its directors $30,000 a year in cash as a base; Atlantis Plastics Inc. offers $32,000; and AEP Industries Inc. pays $20,000. The base is sometimes paid partially in stock, too.
Typically, directors also get fees for attending board and committee meetings, from $500-$1,000 and often get a few hundred to a few thousand shares of company stock or options.
It's a job that's getting more demanding, as a few corporate scandals have forced public and shareholder attention on how well boards are overseeing companies, said Jim Aslaksen, a consultant for executive recruiting firm Spencer Stuart in San Francisco.
Aslaksen, who specializes in recruiting executives and board members in the chemical and plastics industry, said board members are expecting to be paid more for the time and risks they're undertaking.
The right balance for board pay is compensation for the effort and risk involved, but not paying them so much that they, in effect, become employees and lose their independence, said Charles Elson, director of the University of Delaware's Weinberg Center for Corporate Governance.
One company, Foamex International Inc., has substantial outside financial arrangements with its directors.
Besides the board retainer of $50,000 a year and stocks, one compensation committee member has a $5,000 a month consulting deal. Another board member, who led the compensation committee for part of 2002, heads a consulting firm that got $455,000 from Foamex in 2002.
And a third board member received a $150,000-a-year consulting contract in 2002 to identify business opportunities in the Pacific Rim.
Foamex's financial deals with its board have attracted criticism in the past from shareholders who question whether they compromise the board's independence.
One well-known shareholder, Leon Cooperman, head of Omega Advisors Inc. in New York, said at its 2001 annual meeting that Foamex has a ``disturbing pattern of lucrative financial arrangements between the company and its outside directors.''
He declined to comment on the 2002 deals but said the company has a ``long history of inappropriate'' dealings with board members. Cooperman is a former executive at Goldman, Sachs & Co.
Foamex declined to comment.
The company stands out in the industry for those consulting deals with its board. The vast majority of firms do not have anything similar.
Most directors take their responsibilities seriously and spend at least 12 working days a year on board activities, and often much more, Aslaksen said.
As board service gets more demanding, a few companies have made changes in board compensation.
Myers Industries Inc. decided to remove a condition requiring 10 percent return on equity for the board to get more stock options. And Insituform Technologies Inc. decided to award stock grants in addition to options.
Board pay varies greatly, often depending on the size of the firm.
One of the largest companies, Sealed Air Corp., pays its directors $60,000, the highest on our chart, and Newell Rubbermaid Co. compensated its directors $40,000 last year. The company raised that to $50,000 this year.
Small companies like PVC Container Corp. and UFP Technologies Inc. pay $5,000, by comparison.
Summa Industries has what might be the lowest base pay for directors: no annual retainer, $1,000 for each board meeting attended and $1,000 for each committee meeting. But the company offers a healthy option package to directors, granting between 4,000 and 6,000 options a year.
For Summa's board, that has probably worked out well: $100 invested in 1997 was worth $156 in 2002, well above a peer group of firms and the Russell 2000 index. Company officials declined comment.
While pay varies greatly, the adage of getting what you pay for doesn't always seem to apply. A well-paid board does not necessarily mean better returns for shareholders.
Foamex, for example, has not been kind to investors. Its board is among the best paid in our ranking. Yet $100 put into its stock in 1997 would have been worth $29 at the end of 2002.
On the other hand, medical injection molder Merit Medical Systems Inc. pays its board just $12,500 a year, perhaps a bargain when you consider that $100 invested in that company in 1997 would have been worth $498 at the end of 2002.