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Friday, December 03, 2004
Sarbanes-Oxley Remains a Force to Be Reckoned With in the Boardroom
Here's an interesting study from PwC
PricewaterhouseCoopers and Corporate Board Member's Annual "What Directors Think" Study Uncovers More Changes in the Boardroom
New York — 27 OCT 2004 — Two years after the introduction of the Sarbanes-Oxley Act of 2002, corporate reform continues to impact corporate directors, according to a recent study by Corporate Board Member magazine and PricewaterhouseCoopers LLP.
The third annual "What Directors Think" study measures the opinions of directors and CEOs of the top 2,000 publicly traded companies. The 2004 survey findings, which the magazine will highlight in its special year-end "What Directors Think" issue, reveal continuing changes in directors' attitudes and actions.
Key Findings, Trends, and Implications:
As boards' time demands continue to increase, the unofficial title of "professional director" in which individuals sit on six or more boards is quickly fading. In 2003, only 33% of CEOs and 16% of outside directors were limited to additional board seats, compared to 43% and 29%, respectively, in the 2004 survey findings. This trend will likely continue—71% of survey respondents said there should be a limit to the number of boards on which an outside director can serve. The average number of boards on which CEOs and outside directors can now serve is three. These statistics imply that search committees will have to cast a wider net to find qualified independent directors.
For many directors, increased time demands coupled with new risks call for an increase in pay, particularly for lead directors and audit committee chairs. Of survey respondents, 98% said audit committee chairs should receive additional compensation, compared to 81% who said so in 2003 and only 54.1% in 2002. In addition, 68% of this year's survey respondents said lead directors should receive additional compensation. More than half of the respondents believe the lead director and audit chair should get 25% more compensation than other directors, and almost one-third believe it should be as much as 50% more in both cases.
Board evaluations are becoming more commonplace. In the 2004 survey, 73% of respondents said their boards were formally evaluated, compared to 50% in 2003 and only 33% in 2002. In addition, 35% of respondents said their boards evaluate individual directors on a regular basis, compared to only 23% that did so in 2002.
The survey asked directors how much time—more, the same, or less—they think their boards should devote to 14 different subjects. Strategic planning was the number one action item, with 58% of respondents saying they'd like more time to discuss it. The other top responses were succession planning, meeting key managers, visiting work sites, and discussing the competition.
posted by Anonymous @ 9:04 AM
 
1 Comments:
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