New York (Aug. 21, 2003) -- Thanks to Sarbanes-Oxley, companies are starting to address shareholder concerns and make changes to their board structures, practices and compensation, according to a survey by Buck Consultants.
Among the companies surveyed, 56 percent have already or are actively considering seeking new board members with specific expertise; 54 percent have or are considering realigning the membership of board committees; and 49 percent have or are considering hiring outside or independent consultants. Forty-six percent have or are considering increasing the frequency of committee meetings; 43 percent have or are considering holding board meetings without company management present; and 32 percent have or are considering providing director education.
Nearly all of the companies surveyed now have both audit and compensation committees, and the median annual number of audit committee meetings has increased to six, Buck reported. Only 10 percent of respondents practice interlocking boards (where an executive of company A serves on the board of company B, and an executive of company B serves on the board of company A). The Board of Directors Compensation Survey reports on board practices at more than 160 companies.
However, Buck said that companies have been slow to adopt some of the more challenging reforms, such as requiring directors to own stock in the company (21 percent have ownership guidelines) or conducting formal evaluations of Board members' performance (17 percent of the participants do so).
"We noticed that no single organization or industry group is taking the lead on issues like board performance reviews," said Edward Speidel, a principal in Buck's compensation consulting practice. "While boards are more closely scrutinizing the link between executive pay and company and individual performance goals, the idea of similar links for board members appears to have not yet reached their radar screens. This may be a more difficult psychological hurdle, since it requires board members to set their own performance standards and conduct self- and/or peer assessments."
-- WebCPA staff
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