A new Willis Towers Watson analysis finds that total compensation for outside corporate directors rose a modest 2 percent in 2016, upward to just over $260,000.  

The increase was fueled primarily by increases in both cash and stock compensation, the global advisory firm says in its annual analysis of director compensation at Fortune 500 companies. The study also found of all pay elements in a director’s total package, the annual cash retainer for board service experienced the largest increase, jumping 6 percent in 2016.  

Total direct compensation includes cash pay, and annual or recurring stock awards. According to the analysis, the median value of cash compensation increased 4 percent in 2016, to $105,000 while the median value of annual stock compensation rose 2 percent to $150,000. The average mix of pay remained relatively constant at 57 percent in equity and 43 percent in cash.

“Compensation for outside directors at U.S. public companies appears to have stabilized, at least for now,” R.J. Bannister, North America leader of executive compensation consulting at Willis Towers Watson, said in a statement. “While director pay increased modestly last year, the mix of pay between cash compensation and equity remained constant. In fact, only one-third of companies made any changes to the core elements of their pay programs with most of those taking a more balance approach to pay adjustments.”

The growth in median annual cash compensation was driven primarily by the cash retainer for board service, which jumped 6 percent in 2016 to $95,000 at the median. Variable cash pay for board and committee meetings remained virtually unchanged from 2015. 

The median annual stock values increased 2 percent to $150,000. The vast majority of stock grants (92 percent) are based on a predetermined value versus 8 percent of grants that are based on a fixed number of shares.  

Among other analysis findings:

More than half (53 percent) of companies place a cap on annual stock grants for individual directors;

Roughly 26 percent of companies with annual limits expanded the scope of the pay ceiling to include cash and/or total compensation;

There has also been a sizable shift toward basing limits on a fixed dollar amount (73 percent) compared with 63 percent last year;

Nearly three-fourths of companies now have lead directors as an alternative to having a chairman serve as the highest-ranking independent board member; and

Lead directors received an additional $30,000 in compensation last year, up from $25,000 in 2015.

Companies continue to embrace stock ownership guidelines and retention requirements for directors, the analysis says. Ninety-three percent of Fortune 500 companies now have one or both mandates in place, a slight increase from 92 percent in 2015.The vast majority of ownership guidelines (82 percent) are based on a multiple of the annual retainer.

“Given the ongoing demands and pressures being placed on directors, attracting and retaining qualified candidates to serve remains a challenge for many companies. And despite overall director compensation stabilizing, we expect companies will continue to evaluate the role of fixed and variable pay as well as cash versus stock compensation in their director pay programs and make appropriate adjustments as needed,” Bannister said.

Willis Towers Watson analyzed the compensation for outside directors at 300 publicly owned Fortune 500 companies that filed their fiscal year 2016 proxy statements by June 30, 2017. Data for these companies was then compared against an analysis of the same 300 companies for 2015.