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[June 22, 2014]
Who's on Indiana's corporate boards? [The Indianapolis Star :: ]
(Indianapolis Star (IN) Via Acquire Media NewsEdge) June 22--For retired CEOs, politicians and university heads, the sunset years often include well-paid stints on company boards of directors.
As a side job, you can't beat it. Being a board member brings prestige, power and, frequently, lucrative pay.
Lots of recognizable names pop up on the boards of Indiana's largest publicly traded companies.
RELATED: Women, minorities make little progress in gaining seats on corporate boards From business there's Larry Glasscock, who left his high-profile CEO post at Indianapolis insurer WellPoint in 2007 to become a board member at four public companies, pulling down $1 million in board pay last year. Or Ann Murtlow, who quit as CEO of Indianapolis Power & Light and held three board directorships last year that paid her $282,049.
From politics there's former Indianapolis mayors Stephen Goldsmith, who earned $148,000 from retailer Finish Line last year, and Bart Peterson, who in November joined the board of Kite Realty, where he'll earn pay well into the five figures. The board of Old National Bank of Evansville includes former state Supreme Court Chief Justice Randy Shephard and ex-Lt. Gov. Becky Skillman.
And from academia there's former Purdue President Martin Jischke, who pocketed $450,742 from three boards last year (more than his final-year salary at Purdue), and an ex-dean of Indiana University's Kelley School of Business, Jack Wentworth, who earned $60,000 last year from Kimball International in Jasper.
There's even an ex-astronaut doing board duty. Franklin Chang Diaz, who orbited on the Space Shuttle and was the first hispanic-American in space, serves on the board of engine maker Cummins Inc.
Pay is without doubt a lure for serving on boards of for-profit companies. Many, perhaps most, board members at big companies have eased into retirement and don't have the big incomes and perks many enjoyed as full-time executives.
An Indianapolis Star review of the boards of Indiana's 26 public companies with a market capitalization above $500 million shows membership on a board surely ranks among the more lucrative of jobs if figured by the hour. The data came from 2013 company proxy reports to shareholders.
The average compensation to members of those 26 boards was $161,962. The pay includes fees, stock and expenses and was given for attending eight to 15 meetings a year, plus some side homework.
Indiana's top-paid board member in 2013 was Keith Busse, 71, the chairman of Steel Dynamics of Fort Wayne, whose compensation totaled $581,381. He used to be the steelmaker's CEO and was its cofounder. Runner-up was the 68-year-old chairman of insurer WellPoint, George Schaefer, a retired CEO of Fifth Third Bancorp, at $468,951.
Nationally, board pay has risen 3 to 5 percent annually over the past five years, several percentage points less than the increases over the five preceding years, said Bryan Ortwein, director of executive compensation in Milwaukee at Towers Watson, a professional services firm.
Ortwein says money is a factor in why people take board jobs, but there are other drivers at work.
Like this one: Board jobs exude power. At public companies, boards represent shareholders and have far-reaching say on all the key issues their company faces. They oversee budgets and legal matters, hire top executives and handle mergers and acquisitions.
"The job is more complex than 10 years ago," with such hot-button issues as legal liability and executive pay demanding more time from board members, said Ortwein. Companies, he said, require their board members to have "lots of skills and experiences." Glasscock said serving on the boards of Simon Property Group, Zimmer Holdings and Sysco (he left Sprint Nextel's board last year) feels like "a full-time career for me." But after retiring early from his CEO job at WellPoint, where he earned $14.5 million in his last full year, Glasscock said he doesn't mind the growing demands of board work.
"Frankly it's not about the money for me. I love the business world. I love representing the interests of shareholders and it's a chance for me to share my experiences, for what they're worth." Landing a board spot can be one of the ripest plums in the business world. That means the jobs often end up going to CEO-types who don't look all that diverse.
Consider that most board members, in Indiana and nationally, are older men. Women hold only 14.2 percent of board positions at the largest 26 public companies in Indiana, while occupying 16.6 percent of board seats at Fortune 500 companies.
Board members skew decidedly older. In fact, most in Indiana have long since earned their AARP card, with an average age of 61.5 years. It's not uncommon for companies to have multiple board members in their 70s. Last year Simon Property Group and Duke Realty had four septuagenarians apiece, while Lilly and WellPoint each had two.
The oldest board member at the state's largest public companies is Wentworth, 85, the ex-Kelley Business School dean who's been on the board of Jasper furniture and electronics manufacturer Kimball since 1984 and was re-elected last fall to another term.
Wentworth "keeps current on business trends and remains a trusted adviser," said Kimball board Chairman Doug Habig. "We also believe that age is only a measure of time -- being an effective board member is the key -- and Mr. Wentworth has been and continues to be an effective and contributing member of our board." Wentworth joins a short list of Indiana board members who've served for a quarter-century or longer on their boards. Other long-servers: Old National's board chair Larry Dunigan and Celadon Trucking founder and chairman Stephen Russell.
Old National's board, with an average age of 66.6, is the state's oldest among large public companies, which corporate secretary and legal counsel Jeff Knight considers nothing but a plus.
"As a result of the wisdom and experience of our board members, we have one of the most effective boards in the industry today. Our shareholders have been rewarded, and our company's performance through the recent financial crisis is clear evidence of the importance of having a seasoned and proven board." Board members under 40 at Indiana's largest public companies are so rare there were only two of them last year.
The youngest is Alison Egidi, a 32-year-old board member at 1st Source Bank in South Bend. Turns out she has the bloodlines for the job. She's a niece of the bank's CEO, Chris Murphy, and a member of the family that controls close to 30 percent of the shares in 1st Source.
Egidi, who is a director of development at the University of Virginia and a former investment firm vice president, was appointed to 1st Source's board in 2011 along with Murphy's son, Christopher Murphy IV, a Chicago entrepreneur who is 44.
The two were put on the board to show investors and the South Bend community that the family members who control nearly a third of the bank's shares "are very committed to this part of the state and the markets we serve," said John Griffith, the bank's general counsel and secretary to the board.
Egidi, who earned $47,700 for her board service last year, might want to get used to perusing bank financials and visiting South Bend several times a year. She could be around for a long time. Her Uncle Chris, now 67, has been on the board for 41 years, and counting.
Call Star reporter Jeff Swiatek at (317)444-6483. Follow him on Twitter: @JeffSwiatek.
A profile of Indiana corporate directors (2013) --Best-paid board: Eli Lilly and Co. (average compensation $246,000) --Lowest paid board: 1st Source Bank of South Bend (average compensation $54,667) --Highest paid board member: Keith Busse, chairman of Steel Dynamics of Fort Wayne, $581,381.
--Most women: four (Eli Lilly) --Fewest women: 0 (Allison Transmission, Calumet Specialty, Franklin Electric, Interactive Intelligence, Remy International, Republic Airways) --Oldest board: Old National Bank of Evansville (average age 66.6 years old) --Youngest board: Republic Airways (average age 54.8) --Oldest board member: Jack Wentworth, 85, of Kimball International of Jasper.
--Youngest board member: Alison Egidi, 32, of 1st Source Bank.
--Board with longest-tenured members: Celadon Trucking (average 14.8 years of service) --Board with shortest-tenured members: Zimmer Holdings of Warsaw (average 4.4 years of service) --Largest board: Eli Lilly and Co. (14 members) --Smallest board: Celadon Trucking (5 members) Source: 2013 proxy reports from the 25 largest Indiana publicly traded companies.
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