Director's Compensation Project: Cracker Barrel Old Country Store, Inc.

This post is part of an ongoing series that examines the compensation paid to independent directors of public companies. We are using information found in the 2011 proxy statements of the selected companies.

In addition to state standards and Sarbanes-Oxley (“SOX”) requirements, the major U.S. stock exchanges each have their own standards for independence. While the NYSE and NASDAQ rules are substantially the same, there are some minor differences between the two that are worth noting.

NYSE Rule 303A.01, requires that each listed company’s board of directors be comprised of a majority of independent directors. A director is considered independent under NYSE Rule 303A.02(b)(ii) if the director received less than $120,000 in direct compensation, other than director’s fees, in any one year period over the last three years. The NYSE “direct compensation” standard is less restrictive than the corresponding NASDAQ Rule, 5605(a)(2)(B), which includes "any compensation."

NYSE Rule 303A.06 requires a listed company’s audit committee members to comport with the requirements of Rule 10A-3 (C.F.R. §240.10A-3).  SOX Section 301 imposes similar requirements.

One can see some of the effects of these rules when looking at the non-management director compensation table from Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) 2011 proxy statement. According to the proxy statement, Cracker Barrel paid its non-management directors the following amounts:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
James W. Bradford	2,000				2,000
Robert V. Dale	152,000	83,581		10,868	246,449
Richard J. Dobkin	115,000	83,581	7,739		206,320
Robert C. Hilton*	83,000	83,581	35,294	1,000	202,875
Charles E. Jones	105,500	83,581	46,109		235,190
B.F. “Jack” Lowery	88,000	83,581	54,661		226,242
Martha M. Mitchell	93,500	83,581	38,315		215,396
Coleman H. Peterson	9,375				9,375
Andrea M. Weiss	82,500	83,581	24,723	10,868	201,672
Jimmie D. White*	78,500	83,581	5,468	10,868	178,417
William W. McCarten**

*Hilton and White announced their intention not to seek reelection and will resign prior to the annual meeting in December 2011.

**McCarten became a director in August 2011 but was not included on the Director Compensation table provided in the proxy statement.

Director Compensation.  In 2011, the Board of Directors met 11 times and the Board Committees met 24 times. Each director attended 75% of the aggregate number of meetings of the Board of Directors and Board Committee. Each non-employee director was paid a retainer of $45,000, except for Robert V. Dale, who, as Lead Director, was paid $75,000. Each director received an additional $2,000 for each Board of Directors meeting attended. Non-employee directors received $1,500 for each committee meeting attended, except for the directors on the Audit and Compensation Committees, who received $2,000 for each committee meeting attended. The Chairman of each committee received an additional retainer of $13,000, except for the Chairmen of Audit and Compensation Committees, who received an additional $18,000. The company reimbursed non-employee directors for any expenses they incurred as a result of attending meetings. Non-employee directors are also eligible to enroll in the Deferred Compensation Plan. The plan allows participants to defer a portion of his or her compensation and earn interest at a rate equal to a 10-year Treasury bill rate plus 1.5%. Non-employee directors are able to receive medical, prescription, and dental insurance from the company.

Director Tenure. B.F. “Jack” Lowery holds the longest tenure on the board, sitting as director since 1971. Robert V. Dale and Charles E. Jones, Jr. hold notably long tenures as well, since 1986 and 1981, respectively. There were a large number of new additions to the board in 2011. Coleman H. Peterson was elected as a director in June of 2011; James W. Bradford was elected in July 2011; William W. McCarten was elected in August 2011; and along with her promotion to Chief Executive Officer of the Company, Sandra B. Cochran was elected as a director on September 12, 2011. The majority of the directors sit on multiple boards of other organizations or as executives of other companies. James W. Bradford, who until September 11, 2011 served as both Chairman of the Board and Chief Executive Officer of the company sits on the boards of CLARCOR Inc., Genesco, Inc., and Granite Construction, Inc.

Executive Compensation. On September 12, 2011, Sandra Cochran was named Chief Executive Officer. As a result, her base salary was raised 44% from $625,000 to $900,000. Executives do not have the use of a company vehicle or cash allowance for transportation and they may not use the company aircraft for personal use. In 2011, three executives, including Cochran, were reimbursed by the company for home security expenses they incurred.