Management Practice Inc. (MPI) has just completed its fifteenth annual Survey of Mutual Fund Director Compensation and Governance Practices, with data covering 2,158 directors from 406 fund families. Copies of, and specific comparisons to, the survey detail are available.

Year over year “same director” compensation increased an average of 7.3% last year, a slower growth rate after more than five years of double digit increases since the passage of Sarbanes-Oxley and the fund scandals at the start of the decade.

Pay for the independent trustees/directors has risen sharply in the last six months as governance reforms force funds to hold longer and more frequent meetings. In the just completed half yearly update, MPI found that the annual compensation of fund trustees rose 8% in the six months between January and June 2004; or an annual growth rate of 16%. If this holds for the year as a whole it will represent the fastest growth MPI has seen in its ten years of tracking mutual fund director compensation.

In addition, the premium paid to the Chairman, who will shortly be required to be drawn from the independent Board members, has also risen sharply over the premium which used to be paid to the lead independent director. Furthermore, the premium paid to the Audit Committee Financial Expert, a new designation of trustee mandated by the Sarbanes Oxley legislation is also increased.