Despite a difficult market last year for mutual fund investors, independent fund directors awarded themselves an 11 percent average pay raise in 2000. That represents the largest compensation gain in the past eight years, according to Management Practice, the New York consulting firm that specializes in the governance of mutual funds and annually surveys independent mutual fund directors' compensation.
The median annual compensation for an independent director who oversaw a fund complex with between $5 billion and $10 billion in assets was $49,930, but that grew to $106,000 for fund directors whose complexes managed $50 billion or more. Annual director pay was $7,250 for directors of fund complexes with less than $1 billion in assets.
Data from Management Practice's study were released last week.
The record increase in compensation is, in part, attributable to former SEC Chairman Levitt's appeal for independent fund directors to become more involved in the governance process, Management Practice said. Directors, who set their own pay, felt that since the SEC expected more work from them, they should be paid more, said Management Practice.
The survey also found that while overall pay increased, the cost per director, per fund governed has fallen from $2,289 in 1994 to $1,900 in 2000.
The survey also found that the typical board has between nine and 11 members, that 71 percent of board chairpersons are affiliated - not independent - directors, and that only six percent of all fund groups have retirement compensation plans.