Are Directors Dedicated or Skittish? Maybe Both, the Survey Says
from
November/December 2006
by Colin Leinster
Give yourselves a big hand. The director’s workload is up, from an average of 14 hours a month in 2002 to nearly 21 hours in 2006, and you’re still pushing hard to do your job better, according to our 2006 “What Directors Think” survey, carried out in partnership with PricewaterhouseCoopers. We were particularly impressed that 86% of your boards are now conducting board evaluations.
One of the more surprising findings is that 88% of the 1,330 respondents welcome the new transparency requirements for executive pay that the Security and Exchange Commission has mandated for inclusion in next year’s proxies. But weigh this against another finding in the survey: 44% think you’re more at risk of being sued than you were a year ago. You may well be, given that the SEC reform seems sure to heat up shareholder ire and the plaintiffs’ bar.
I asked PricewaterhouseCoopers partner Catherine Bromilow, who leads the firm’s corporate governance group, to help make sense of this apparent mix of dedication and skittishness. What she says isn’t all that reassuring. She doubts that in the last 12 months the risks for directors really have increased—but she thinks the SEC’s new disclosure rules could produce unpleasant surprises. Directors, she fears, may be taken aback once they see how the total compensation numbers for CEOs and other executives add up.
Bromilow also points out that 71% of you expect your companies to reduce pension-plan benefits for employees—a subject addressed in “The Complex Pain of Cutting Retiree Benefits,” which begins on page 70. We hope the article helps directors think through one of the most wrenching calls many boards now have to make.
The complete results of the survey can be found online at
boardmember.com
. Highlights appear throughout this issue and inspired some of the questions in “On My Mind” (page 29), where 100 directors sound off on a variety of hot boardroom topics. The On Board section, which begins on page 10, leads off with a question we asked on your behalf: Just how does a director find time to think, and where’s the best place to do so? One board member likes to prepare speeches in a swimming pool. More of you, probably, think things over on the links. Thus “The 10 Best Golf Courses for Doing Business” (page 82), which doubles as a guide to where you can be alone in your head.
Time to Rethink Sarbanes-Oxley
It’s good news that a group of high-powered business leaders is forming a private commission to push for changes in the Sarbanes-Oxley Act. Its aim seems to be to root out the parts of the reform that hinder U.S. competitiveness, a cause that will ring bells with many of our readers, some of whom address that very subject in this issue. One might wish that the group included fewer CEOs and investment bankers and more independent directors. Sarbanes-Oxley was designed to protect shareholders, after all, not top managers. Still, fresh thinking and fresh air are always welcome, particularly in Washington, where they’re rare commodities. The Committee on Capital Markets Regulation is expected to release its report in late November.
