Director's Compensation Project: General Mills 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 Rule303A.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.

Independent directors are compensated for their service on the board.  The amount of compensation can be seen from examining the non-management director compensation table from General Mills  (NYSE:GIS) 2011 proxy statement.  According to the proxy statement, the company paid the directors the following amounts:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Bradbury H. Anderson	75,000	90,013	66,874	—	231,887
R. Kerry Clark	83,750	90,013	66,874	—	240,637
Paul Danos	80,000	90,013	66,874	30,249	267,136
William T. Esrey	90,000	90,013	66,874	49,077	295,964
Raymond V. Gilmartin	85,000	90,013	66,874	37,182	279,069
Judith Richards Hope	90,000	90,013	66,874	41,818	288,705
Heidi G. Miller	75,000	90,013	66,874	14,446	246,333
Hilda Ochoa-Brillembourg	75,000	90,013	66,874	36,273	268,160
Steve Odland	75,000	90,013	66,874	21,921	253,808
Lois E. Quam	37,500	90,013	66,874	22,750	217,137
Michael D. Rose	85,000	90,013	66,874	42,749	284,636
Robert L. Ryan	80,000	90,013	66,874	39,332	276,219
Dorothy A. Terrell	81,250	90,013	66,874	39,455	277,592

Director Compensation  During fiscal year 2011, General Mills held six Board of Directors meetings and 23 Board Committee meetings. Each director attended at least 75% of the aggregate number of meetings of the Board of Directors and meetings of the Board Committees on which he or she served.  Upon attending their first board meeting and at each re-election, each non-employee director receives restricted stock units with a value of $90,000 that vest at the next annual shareholder meeting.  Non-employee directors each receive a $75,000 annual retainer.  The chair of the audit committee receives an additional $15,000, chairs of other committees receive an additional $10,000, and other audit committee members receive an additional $5,000.  General Mills has a Planned Gift Program for Directors for all directors elected prior to the 2006 fiscal year. The Planned Gift Program is funded by General Mills paid life insurance policies on each participating director.  Upon the death of a participating director, General Mills donates $1 million to a qualifying charity recommended by the director, and receives the entire charitable deduction.

Director Tenure  Mr. William T. Esrey and Mrs. Judith Richards Hope, members of the Board of Directors since 1989, are the longest tenured directors.  Elected in 2009, R. Kerry Clark has the shortest tenure of all the board members.  Several directors also sit on other boards.  Mr. Michael D. Rose is a director of Darden Restaurants, Inc., and Gaylord Entertainment Company.  Mr. R. Kerry Clarke is a director at Textron, Inc., and Bausch & Lomb.

CEO Compensation  Chief Executive Officer, Kendall J. Powell, received  $11,518,788 in total compensation during the fiscal year.  This includes an increase of 8.92% in Mr. Powell’s base salary for 2011, bringing that amount to $1,059,883.  Mr. Powell received an additional $279,645 in other compensation, $109,753 of which was for personal travel, $15,000 was for financial counseling, and $9,018 was for use of the executive car.  Mr. Powell joined General Mills in 1979 and served in a variety of positions before being appointed Chief Executive Officer in 2007 and Chairman of the Board in 2008.  

Chief Operating Officer Ian R. Friendly received $4,070,401 in total compensation in 2011.  This represents an increase of 6.51% in Mr. Friendly’s base salary for 2011, bringing that amount to $554,426.  Mr. Friendly also received $117,026 in other compensation, of which $4,614 was for personal travel, $12,773 was for use of the executive car, and $9,450 was for financial counseling.  Chief Financial Officer Donal L. Mulligan received $3,626,898 in total compensation in 2011.  This represents an increase of 11.65 % in Mr. Mulligan’s base salary for 2011, bringing that amount to $543,000. Mr. Mulligan also received $103,924 in other compensation, of which $1,753 was for personal travel, $15,010 was for use of the executive car, and $16,000 was for financial counseling.