Lexington, Mass. (Dec. 9, 2003) -- Shareholders see a large gap to fill between investor expectations and board performance, according to a survey by Lieberman Research Worldwide.
A majority of respondents say that board functions should include improving product and service quality (59 percent say "very important"), ensuring the company's competitiveness (71 percent), and critically assessing management performance (84 percent), according to the phone survey of 150 institutional investors and 150 individual investors.
Company boards will find themselves subject to intense scrutiny from shareholders in the Sarbanes-Oxley era, according to the poll, "American Corporate Governance: Restoring Investor Confidence." Direct, relevant experience will be critical for board members, either as senior executives from other companies (cited by 73 percent an essential criterion for board membership), or as "major shareholders who are officers of the company" (cited by 71 percent).
Nearly two-thirds (62 percent) of respondents say boards should devote more time and effort toward company operations. Eighty-one percent of those surveyed say operational knowledge is important, while 36 percent say it is "very important." Only a third of investors (36 percent) feel that outside directors are well informed.
Two-thirds expect outside directors to have experience in the company's industry or line of business and 64 percent expect directors to have experience in running the operations of a company. More than half (55 percent) want outside directors to have experience in management of a major corporation.
- WebCPA staff
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