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Corporate Governance

: The Race to the Bottom

The Director Compensation Project: Regions Financial

By Pardis Ostadi

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This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2007’s Fortune 100 and using information disclosed in each company’s 2008 proxy statements. In addition to state standards and the requirements of SOX, the stock exchanges have each adopted their own standards for director independence. Meeting stock exchange requirements is mandatory for most listed companies.

Under NYSE Rule 303A.01, all listed companies must have a majority of independent directors sitting on their boards. Directors are not independent if they received over $100,000 in direct compensation, other than director’s fees, in any one year period over the last three years pursuant to Rule 303A.02(b)(ii). This is a looser restriction than the equivalent NASDAQ Rule, 4200(a)(15), which includes all compensation. Rule 303A.06 requires that, in addition to the general independence standards, audit committee members must comport with the requirements of Exchange Act Rule 10A-3 (C.F.R. §240.10A-3), also known as SOX 301.

One can see some of the effects of these rules when looking at the director compensation table from Regions Financial’s (RF-NYSE) 2008 proxy statement.

Name	Fees Earned or Paid in Cash ($)	Option Awards ($)(1)	All Other Compensation ($)(2)	Total ($)
Samuel W. Bartholomew, Jr.	69,500	8,151	4,542	82,193
George W. Bryan	65,000	8,151	0	73,151
David J. Cooper, Sr.	60,500	23,845	5,292	89,637
Earnest W. Deavenport, Jr.	93,167	23,845	6,542	123,554
Don DeFosset	66,500	23,845	5,292	95,637
Martha R. Ingram	63,500	23,845	0	87,345
Ronald L. Kuehn, Jr.	34,000	15,694	8,500	58,194
James R. Malone	77,000	23,845	4,542	105,387
Susan W. Matlock	65,000	8,151	5,292	78,443
John E. Maupin, Jr.	41,500	4,871	0	46,371
Charles D. McCrary	75,500	23,845	7,167	106,512
Claude B. Nielsen	78,500	23,845	2,896	105,241
Jorge M. Perez	57,500	8,151	4,167	69,818
Malcolm Portera	26,500	0	6,625	33,125
John R. Roberts	81,500	8,151	5,667	95,318
Lee J. Styslinger III	80,000	8,151	6,792	94,943
Robert R. Waller	29,500	0	0	29,500
Spence L. Wilson	68,000	8,151	4,542	80,693
Harry W. Witt	93,333	8,151	6,500	107,984

Director Compensation : Regions Financial’s board met six times last year. In 2007, all incumbent directors attended at least 75% of the board and committee meetings. The non-employee directors averaged $82,265 in total compensation for their services. As can be seen in the table, much of their compensation came in the form of director’s fees paid in cash, and not as option awards.

Director Tenure : On average, the non-employee directors have served on the board for five years. George W. Bryan, has tenure of twenty-one years, the longest by far. The majority of the directors also sit on other boards. One of the directors alone sits on four additional boards: LifePoint Hospitals, Variable Annuity Life Insurance Companies, American International Group, and HealthSouth Corporation.

CEO Compensation : The CEO, C. Dowd Ritter, received $ 7,713,138 in total compensation last year, a relatively small portion of which came in the form of cash ($995,000). Performance incentives accounted for $1,273,600 of his compensation, while $1,740,806 came from stock awards and $1,342,286 from options awards. A small portion ($330,116) came from "other compensation."

Full post as published by The Race to the Bottom on May 04, 2008 (boomark / email).