Public Yellow Pages Companies = Full Disclosure

The news has been full of the immense bonuses that are being paid to financial and legal executives because of their companies’ incredibly profitable year. The individuals whom we read about tend to be the investment bankers and traders or top attorneys who are on the firing line every day. Some may view the sheer size of the bonuses as over the top, especially when they start to make athletes’ or entertainers’ incomes look almost reasonable. If nothing else, reading about the money that is being made by a few superstars brings forth emotions, and it is a topic that most everybody has an opinion on.

Meanwhile Idearc is continuing with its top-to-bottom reorganization and on Dec. 14, the company filed a form 8-K stating that it had approved a compensation program for non-employee directors. These folks will receive a “target annual pay package” of between $150,000 and $220,000 with $90,000 paid in the form of equity. You might suspect that Idearc was challenged to find directors since the 8-K also says, “as an initial inducement to serve on the board, each member of the board will receive a one-time equity award with a value of $170,000.”

I took a look at how a few other public companies in the directory publishing business compensate their non-employee directors. It’s tough to be precise, but R.H. Donnelley pays an annual retainer fee of $40,000 and grants each non-employee director 1,500 deferred shares, which last year would have amounted to approximately $90,000. Yell Group is not quite so generous (with the exception of the lead director who received approximately US$200,000 in 2006). Other non-employee directors typically get paid approximately US$80,000.

There is no question that board members make decisions that affect the direction a corporation takes. A good board will not only put into place important corporate governance policies, but also ensure that top executives are meeting goals that will benefit stockholders, customers, employees and all of the “publics” that a corporation is responsible to. I’m not going to pass judgment on the remuneration for non-employee directors, but I do think that it is the management and employees who risk their jobs every day for the benefit of the corporation who should be well compensated.

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