Board Changes Since SOX
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The composition of America's boards has changed since the Sarbanes-Oxley Act. The finding is from a new survey of boards and their directors by Spencer Stuart. In particular CEOs are taking on fewer directorships. Companies are having to expand their views on what they seek in a new director. The average number of outside corporate directorships held by CEOs of S&P 500 companies has fallen to 0.8, from 1.2 in 2001 and 2.0 in 1998. Active CEOs now comprise only 29 percent of new independent directors in the S&P 500, down from 47 percent in 2001. New directors are increasingly first-timers. 31% of new directors are new boys. "The five-year trends in the report indicate the profile in the boardroom has changed. Over the next five years we expect to see more first-time directors, more directors who are not CEOs but are highly placed company executives, and more diversity in the boardroom," said Daum. "Many leading companies now view recruiting a director as an opportunity to add someone with a defined, needed set of skills and experience, such as international assignments or expertise in technology or marketing that will help to support the company's strategy. They have become much more thoughtful and strategic about board composition." In 39% of companies the CEO is the only director actually paid by the company. According to Spencer Stuart (the company sponsoring the research) this made companies more independent. However, in contrast to Europe the CEO role is often combined with the Chairman role. Audit, compensation and nominating committees now comprise only independent directors and the trend to independence extends to other committees as well.
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