Highest paid board directors
Minneapolis / St. Paul Business Journal - by Katharine Grayson Staff Writer
Nearly half of Minnesota’s 100 largest public companies paid their boards $1 million or more last year, up from just 30 firms the prior year, according to Business Journal research.
The increase in million-dollar boards was accompanied by a shuffling among the ranks of companies who paid out the most to their directors; see the top 25 ranked on the Highest-paid Corporate Boards List on page 14.
UnitedHealth Group Inc. paid out $5 million to 10 directors in 2006, making its board the highest-paid in Minnesota for that year. The Minnetonka-based health insurer fell to third place in 2007, paying its board $3.4 million. However, during that time, its board shrank from 10 members to eight.
TCF Financial Corp. rose to first place on this year’s list, with the Minneapolis-based bank paying its 12 directors $3.69 million. Another Minnesota financial giant, U.S. Bancorp, ranked second, providing its 13 directors with roughly $3.7 million in total compensation.
The Business Journal’s list is based on financial data reported in public companies’ annual proxy statements.
Rounding out the top five are The Mosaic Co., which paid its 12-member board about $3.4 million, and General Mills Inc., which paid $3.2 million to its 14-member board. Golden Valley-based General Mills ranked fourth on last year’s list, with compensation for its board members remaining unchanged year-over-year. Mosaic, however, is a newcomer to the top five. The fertilizer company’s former CEO and board member Fritz Corrigan also debuted this year on the Business Journal’s Top 100 List of the Highest-paid Board Directors at public companies; he received a total of $814,790 in compensation, with $122,785 coming in the form of stock awards and $685,000 in other compensation.
Richfield-based Best Buy Co. Inc. fell from having the fifth-highest-paid board to eighth. This year, its 12-member board received $2.7 million in compensation; last year, $3.8 million.
It’s grown common for large public companies to pay their boards upward of $1 million. In 2007, U.S. public corporations spent an average of $1 million on board compensation, according to a study by The Corporate Library of more than 3,000 companies. Minnesota had 48 million-dollar corporate boards during the same year.
That’s one reason it’s not surprising to see the number of million-dollar boards climb in Minnesota, said Robert Rosenbaum, a partner in the corporate governance group at Dorsey & Whitney in Minneapolis. “Over the last five or six years, there’s been more pressure on boards to perform and that’s led to an increase in workload and in pay.”
As banking institutions are highly regulated, it’s also not surprising that companies such as U.S. Bancorp and TCF Financial ranked in the top five, he said.
As in last year’s list, Minnesota public companies’ board-compensation practices reflected a mix of stock awards, cash, stock options and other compensation. Of the top 100 highest-paid directors on the list, only 30 did not receive any stock awards. In the top five, two board members — UnitedHealth’s Richard Burke and EnteroMedics Inc.’s Bobby Griffin — did not receive stock awards.
The board members who received the highest cash payments included Jerry Grundhofer of U.S. Bank, who received a cash payment of $500,000, and Burke, who pulled in $362,000. Nash Finch Co.’s William Voss received a cash payment of $296,562.
For Minnesota’s repeat highest-paid board member, however, stock awards made up the bulk of his compensation package. William Cooper, a director of TCF Financial during the period studied, received $2.89 million in compensation from a “chairman’s stock award.” That’s out of a total compensation of nearly $3 million. TCF announced in July that Cooper would come out of retirement to resume his post as CEO of the bank, as well.
EnteroMedics’ Griffin was one of three newcomers to this year’s list of the highest-paid individual directors. Griffin received $812,790 in compensation, thanks to a consulting arrangement with EnteroMedics. Griffin is a retired Medtronic executive. EnteroMedics, which completed its public offering in 2007, is by far the smallest company in the upper ranks of the list. It recorded no revenue in 2007 and had 60 employees as of Dec. 31. The firm is developing a device to treat obesity.
Grundhofer also debuted this year in the top five, pulling in $622,013; most of that compensation came from a $500,000 cash retainer. Grundhofer is former chairman and CEO of U.S. Bank.
In addition to having one of the highest-paid directors, U.S. Bank tied for having the most board members on the Top 100 List. The bank had 11 directors on the list, who combined made about $3.35 million. General Mills also had 11 members, who made, as a group, $3 million. Another company with significant repeat appearances included UnitedHealth Group, who had eight members on the list. Combined, those directors received about $3 million. Target Corp. had five members on the list, who combined reaped $1.43 million.
Big movers on this year’s list compared to 2007’s report included Dale Spencer, who moved from a rank of 17 to 7. Spencer serves on the board of Plymouth-based med-tech firm ev3 Inc. Linda Hart, chairman of Oakdale-based Imation Corp.’s board, jumped from 49th place to ninth. Last year, she pulled in $520,000. Other Imation board members who climbed the ranks include Ronald LeMay, who moved to 39 from 72; Michael Fields, who leapt from 92 to 50; and Glen Taylor, who landed at 45, up from 70.
kgrayson@bizjournals.com | (612) 288-2106
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