On September 28, Business Roundtable, an association of chief executive officers of 160 leading U.S. companies, released the results of its fifth annual survey on corporate governance practices amongst its members. The survey showed a strong trend toward increased independence and company oversight by company boards of directors. Specifically, the survey showed an increase in the number of independent directors serving on corporate boards (90% of the responding companies reported that their boards were at least 80% independent in 2007 and the same percentage have an independent chairman, lead director or presiding director) and a significant rise in the number of companies that have adopted majority voting for directors (82% of the responding companies).
This year’s survey also included questions that focused on governance reform, including:
- Executive Sessions: 71% of boards of directors meet in executive session each year and 97% of Audit Committees (85% at each meeting), 92% of Compensation Committees and 68% of Nominating/Governance Committees meet in executive session each year.
- CEOs Serving on Other Boards: 75% of CEOs serve on no more than one other public company board. Nearly half (48%) of CEOs serve on only one other public company board, while 27% of CEOs do not serve on any other public company boards.
- Shareholder Communications: Only 38% of the companies responded that board members have met with shareholders in the last year.
- Sarbanes-Oxley: Sarbanes-Oxley compliance spending continues to decline. Approximately 50% of companies stated that they expect costs to decrease moderately in light of the Securities and Exchange Commission’s interpretive guidance and the Public Company Accounting Oversight Board’s Auditing Standard No.5 regarding internal controls over financial reporting.
- Pay-for-Performance: 40% of the companies responding indicated that they adjusted the pay-for-performance element of senior executive compensation in the past year. In 2006, 57% of the companies reported doing so.