Hell No, We Won’t Let Go
from
March/April 2006
by Sheree R. Curry
It’s hardly a secret that the reformers’ push to split the roles of
chairman and CEO went down like a punctured soufflé. But a survey by
executive recruiter Spencer Stuart shows even less enthusiasm than
that. The firm studied the 2005 proxies of 478 companies listed among
the S&P 500 and found:
140 companies claimed to have independent chairmen. But 73 of those chairmen were former CEOs and didn’t really qualify as independent . . . and another 21 were current or retired executives, were related to the CEO, or had other ties to the company. So they weren’t independent either. And then 3 of the companies didn’t even list a chairman, independent or otherwise. So how many of those 478 companies had truly independent chairmen? 43.
Although the Spencer Stuart study shows minimal appetite for independent chairmen, reform pressure has moved an increasing number of companies to opt for the alternative of appointing a lead director. (For more, see the cover story, which begins on page 24.) Companies are yielding to another change demanded by reformers:
At 39% of the 478 outfits, the only inside director was the CEO. This was true at 12% of the 148 companies analyzed in 2000.
Gender and ethnic diversity on boards went down over that five-year period, however. In 2005, 88% of the companies had at least one female director, a decrease from 93% in 2000. The percentage of directors of color fell from 77% to 73% over the same five years.
Julie Daum, the U.S. board practice leader at Spencer Stuart, says she’s “saddened” by these decreases. She adds that the trend will reverse as boards widen their search for directors from sitting CEOs to a pool including more women and minorities. She’s optimistic that that will happen, she says.
