The Director Compensation Project: Wyeth

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 Wyeth’s (WYE-NYSE) 2008 proxy statement. According to the proxy statement, the directors received the following compensation:

Name	Fees Earned or Paid in Cash(1) ($)	Stock Awards(2) ($)	Option Awards(2) ($)	All Other Compensation(3) ($)	Total ($)
Robert M. Amen	$14,606	—	—	—	$14,606
John D. Feerick	$85,000	$67,800	$38,160	$9,500	$200,460
Frances D. Fergusson, Ph.D.	$78,950	$97,580	$43,030	$3,500	$223,060
Victor F. Ganzi	$83,150	$96,960	$54,190	—	$234,300
Robert Langer, Sc.D.	$78,950	$116,100	$43,030	$12,500	$250,580
John P. Mascotte	$92,350	$67,800	$43,030	$12,500	$215,680
Raymond J. McGuire	$72,650	$32,180	$20,370	—	$125,200
Mary Lake Polan, M.D., Ph.D., M.P.H.	$82,900	$67,800	$43,030	$12,500	$206,230
Gary L. Rogers	$80,000	$96,080	$52,010	—	$228,090
Ivan G. Seidenberg	$82,900	$67,800	$43,030	$7,500	$201,230
Walter V. Shipley	$72,676	$88,590	$46,345	$12,500	$220,111
John R. Torell III	$81,850	$67,800	$43,030	$250	$192,930

Director Compensation: Wyeth’s board convened nine times last year. None of the independent directors received more than $100,000 in cash compensation. The average total compensation including that of Mr. Amen was $192,706. Excluding Mr. Amen’s outlying salary the average total compensation for the board was $208,897. The majority of the total compensation came from stock and option awards. Under NYSE rule 303A, these awards are considered director’s fees and do not count against independence.

Director Tenure: The directors of Wyeth’s board average almost nine years of tenure. However, this number does not reflect the tenures of Ivan G. Seidenberg who resigned early this year and Walter V. Shipley who retired replaced by Robert M. Amen. The directors sit on a mix of other corporate and academic boards including Hearst Argyle Television Inc. and the Board of Overseers of Harvard University.

CEO Compensation: As CEO, Bernard Poussot received $12,654,098 in compensation. Stock options and awards heavily supplemented Mr. Poussot’s direct salary of $1,050,400. Mr. Poussot also received $263,845 in “other compensation.” Mr. Poussot’s “Other compensation” included $173,770 for use of the corporate aircraft.