Discussion of Director Compensation
The 2019 annual compensation for NI’s non-employee directors was comprised of cash compensation in the form of an annual retainer, committee chair retainer, committee membership retainer, independent board chair retainer and equity compensation in the form of RSUs. Each of these components is described below. An NI employee director does not receive any additional compensation for his service as a director. Thus, neither Mr. Starkloff, Mr. Davern nor Mr. Kodosky received any compensation for his service as a director.
In 2019, we adjusted the equity compensation for our non-employee directors after consideration of data and advice provided by Compensia, Inc. (“Compensia”), an independent compensation consultant. Based on data provided by Compensia, the compensation for our non-employee directors was at the lower end of the range of the comparable companies. Accordingly, in April 2019, the vesting schedule for the $175,000 in annual RSUs (based upon the prior day’s closing stock price) to non-employee directors was modified to a one-year vesting period from a three-year vesting period and the modification was effective for the April 2019 RSU awards. New non-employee directors joining the Board are eligible for the annual RSU award of $175,000 at the first Board meeting following the date in which the new director joins the Board. New non-employee directors joining the Board are also eligible for a one-time RSU grant of the number of shares valued at $175,000 (based upon the prior day’s closing stock price), which is awarded simultaneously on the date of the first annual RSU award received by the non-employee director. The one-time grants to new non-employee directors will vest in equal installments over a three-year period. In October, the Nomination and Governance Committee reviewed cash compensation data prepared by Compensia and determined that the current non-employee director cash compensation structure is appropriate.
Annual Board/Committee Retainer Fees
For 2019, our non-employee directors received cash compensation for membership on the board of directors and committees, committee chair positions, and the independent board chair position. Specifically, non-employee directors receive an annual cash retainer of $60,000 per year, plus $10,000 per year for membership on the Audit Committee, $7,500 per year for membership on the Compensation Committee, and $5,000 per year for membership on the Nomination and Governance Committee. In addition, the chairpersons of the Audit Committee, Compensation Committee and Nomination and Governance Committee receive an additional $25,000, $20,000 and $15,000 per year, respectively. The independent Board Chair receives an additional $100,000 per year for his service. All cash compensation is paid in quarterly installments.
The Board, in its discretion, may pay an overnight meeting fee or special meeting fee for extended meetings, not to exceed $2,000 per day. An NI employee director does not receive any additional compensation for service as a director.
Non-Employee Director Reimbursement Practice
Non-employee directors are reimbursed for travel and other out-of-pocket expenses connected to Board service.
Restricted Stock Unit Awards
Under NI’s applicable equity incentive plan, non-employee directors are eligible to receive RSU grants. Specifically, beginning in 2019, each non-employee director receives an annual grant of RSUs equal to $175,000 divided by the closing price of NI’s common stock on the day immediately preceding the date of grant, with a one-year vesting schedule, and new non-employee directors are eligible for a one-time grant of RSUs equal to $175,000 divided by the closing price of NI’s common stock on the day immediately preceding the date of grant, with a three-year vesting schedule in equal annual installments to be granted at the same time as the new non-employee director's first annual RSU grant. Under the 2015 Incentive Plan, in 2019, Mr. Roesslein, Ms. Le, Mr. McGrath, Dr. Fettweis, Mr. Cashman, and Mr. Griffin were each granted 3,699 RSUs. The grant date fair value of each RSU grant was based on the April 23, 2019 closing price of $47.32 per share and vest on May 1, 2020. In connection with their initial appointments to the Board, on April 24, 2019, Mr. Cashman and Mr. Griffin were each granted an additional 3,699 RSUs based on NI’s closing stock price of $47.32 per share on April 23, 2019. The RSUs granted to Mr. Cashman and Mr. Griffin vest over a three-year period with 1/3rd of the RSUs vesting on May 1 of each year. Such grants had the same grant date fair value as the 2019 Director Grants.