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Director Pay Nears $200,000 at Top U.S. Companies
Fewer Stock Options, More Ownership Requirements and Premium Pay for Major Committee Heads

NEW YORK, September 28, 2005 - Average compensation for Directors of major U.S. companies surged to over $195,000 in a second year of double-digit growth, driven by the position's increased responsibilities and recruiting challenges, according to a new study by compensation consultants Pearl Meyer & Partners, a practice of Clark Consulting.

There was a continued trend away from the use of stock options in favor of providing Directors with restricted stock grants, while more Boards adopted minimum stock ownership requirements - mirroring recent changes in executive pay practices that are intended to better link compensation with long-term shareholder value. Pearl Meyer & Partners' 2005 Director Compensation Study, which is based on proxy reports filed by the Top 200 U.S. industrial and service companies, also revealed significant increases in pay for Chairs of Audit and Compensation Committees.

"Director remuneration is catching up to the greater demands of Board service in the current governance environment," said David N. Swinford, Senior Managing Director of Pearl Meyer & Partners. "Members today are confronted by greatly increased time demands, a more rigorous regulatory landscape and a shrinking pool of willing candidates who meet new standards of expertise and independence."

Shifting Pay to Shares
Average total remuneration for Top 200 Directors rose 11% to $195,443, marked by a major shift in the use of equity incentives, according to the Pearl Meyer & Partners' report. A record 86% of the Top 200 companies provided Directors with grants of full-value shares, which rose an average one-third in value to $67,801. Conversely, about half of Boards provided members with stock options, down from three-quarters of the Top 200 in 2002. Option values fell for a third straight year, down 13% to $43,235. Overall, all but three of the Top 200 companies delivered a portion of Board pay stock.

Differentiated Committee Pay
Because they deal with two of the most controversial and rapidly evolving areas of governance, Audit and Compensation Committees have been subjected to particular scrutiny from regulators, investors and the media. "Many of the Board's toughest decisions are forged in the Audit and Compensation Committees," said Swinford.

The key role played by the committees' leadership is reflected in significant growth in Chair retainers, which rose an average 19% to $16,082 for Audit Committee Chairs and a 14% rise to $11,312 for Compensation Chairs. Average committee member compensation declined slightly, due mostly to the elimination of committee meeting fees by some companies. Average total remuneration for Top 200 Directors rose 11% to $195,443, marked by a major shift in the use of equity incentives, according to the Pearl Meyer & Partners' report. A record 86% of the Top 200 companies provided Directors with grants of full-value shares, which rose an average one-third in value to $67,801. Conversely, about half of Boards provided members with stock options, down from three-quarters of the Top 200 in 2002. Option values fell for a third straight year, down 13% to $43,235. Overall, all but three of the Top 200 companies delivered a portion of Board pay stock.

Securities and Healthcare Industries Lead in Board Pay
Among the 24 industries studied, Directors of Securities and Healthcare companies were pay leaders by a wide margin, posting double-digit increases that brought average Board compensation in both sectors to nearly $350,000. The usually highly ranked Diversified Financial industry dropped to the eighth place in total pay at $204,098. The decline was due largely to a steep decline in full-value grants, which are the only form of Board equity used in the financial sector. The lowest average levels of pay were reported by companies in the Wholesalers/Distributors and Energy/Utilities industries at $157,219 and $154,084, respectively.

Other Board Practices
According to the Pearl Meyer & Partners report, the average Top 200 Board has 10 members, with most electing Directors either annually or for three-year terms. Nearly half of major companies maintain a mandatory Board retirement age, most commonly 70 or 72 years. A total of 48 companies have chosen to separate the positions of Chairman and CEO, while 71 Boards have selected a Lead Director.

About the Survey
The survey group is composed of the 200 largest public U.S. industrial and service companies, excluding mutual companies and companies with dominant insider ownership. Survey results are based on a composite Director profile, with data drawn from proxy statements and annual reports for fiscal years ending between February 1, 2004 and January 31, 2005. The full 2005 Director Compensation Study report will be available later this fall.

About Pearl Meyer & Partners
Founded in 1989, Pearl Meyer & Partners is recognized for its counsel to Board Compensation Committees and senior managements. The firm specializes in the evaluation, design, development and implementation of compensation programs for executives, employees and Boards, as well as issues related to corporate governance. Services also include customized marketplace surveys, organizational development and sales incentives, all supported by strong actuarial and benefits expertise. Headquartered in New York, Pearl Meyer & Partners maintains offices in Atlanta, Boston, Charlotte, Chicago, Houston and Los Angeles.

Pearl Meyer & Partners is a practice of Clark Consulting (NYSE: CLK), a leading publicly traded firm in its field, serving more than 3,800 U.S. companies nationwide with comprehensive advice on the design, financing and administration of compensation and benefit programs.

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