Board Meetings are Taking Longer...
from
What Directors Think 2003
by Colin Leinster
Corporate Board Member’s second annual survey of what directors think—about their jobs, the pressures they’re under, the rewards—shows that just about all of you are putting longer hours into board work. No surprise there. What is startling is just how much extra time board meetings themselves are eating up.
As the chart opposite shows, in 2002 some 46% of directors averaged less than two hours per meeting, and for almost as many, meetings lasted three to four hours. Fewer than 7% spent between five and six hours at each meeting, and that’s about as long as all but a very few board meetings ever ran. In 2003 the percentage of directors who got away with meetings lasting less than two hours dropped by nearly 90%. The percentage whose meetings ran up to four hours held steady—but the percentage of those for whom the average was five hours or more rose sevenfold, to about 50%.
The biggest increase, however, was among directors whose board meetings lasted more than six hours. In 2002 a barely significant 0.4% reported meetings that lasted “all day.” A day, of course, can be an imprecise measure. But the 2003 survey shows that 12% attended meetings that lasted seven to eight hours (a full day’s work for many people), 3.6% clocked meetings lasting nine to 10 hours, and 3.7% attended meetings of more than 10 hours. Perhaps next year’s survey should establish new two-hour categories reaching all the way to 24-hour days.
Members of audit committees also report putting in longer hours. Again, the percentage of directors whose meetings lasted two hours or less fell dramatically (from 46.5% to 28.9%), while more of those surveyed tell us their meetings took longer. Audit committee meetings lasting between three and four hours were the norm for almost 59%, vs. 46% in 2002. More than 3% report “all day” meetings, up from 0.4% in 2002. And with those extra hours comes the growing feeling that the chair of the audit committee deserves better pay. In 2002, 54.1% thought so; in 2003, 81%. (For more on directors’ workload, see the following story.)
The survey also shows changes in thinking about director evaluations, individual or collective. Just over 50% say their boards were formally evaluated, vs. 33% in 2002. Among the evaluated, more than 98% rate the evaluations effective, vs. 85% the previous year. Individual evaluations increased from 19% to 23% over the same period, and the percentage of directors rating them effective rose from 85% to 97%. Directors clearly support this process: 83% of the respondents say they think board members should be individually evaluated, vs. 76% in 2002.
Though corporate reforms have added to directors’ workload, they do seem to have several upsides, according to the survey. More than 60% of the respondents say good governance practices mean lower premiums and better coverage by their directors’ and officers’ insurance; in 2002, 51% thought so.
Even the specter of getting sued seems less scary in the presence of better governance. Nearly 73% of those surveyed say they feel that the changes they’ve reported make them less likely to be named in a securities case (up from 66%), and 84% think that even if they were named they’d be exonerated (up from 77%).
