NEW YORK, Oct. 23, 2006 (PRIMEZONE) -- Almost half of directors (47 percent) sit on only one public company board, and a total of 78 percent sit on one or two, according to the latest "What Directors Think" study conducted by PricewaterhouseCoopers LLP and Corporate Board Member magazine.
"Directors appear to be limiting the number of boards they serve so they can give proper attention to each board responsibility," said Catherine Bromilow, a partner with PricewaterhouseCoopers and U.S. leader of its Corporate Governance Group.
"But this trend poses a two-edged sword. In the past, we were concerned directors were serving on too many boards. Now the question becomes whether there is sufficient cross-fertilization to leverage knowledge and learn -- especially if directors are sitting on just one."
Almost nine out of ten responding boards (86 percent) also report that their performance is formally evaluated on a regular basis. Of that number, six in 10 boards (59 percent) took action or implemented plans as the result of the evaluation.
Also, six in 10 boards (59 percent) employ their internal general counsel to perform this evaluation, while only 15 percent use an outside attorney, and another 14 percent use either an internal officer or outside advisor.
Board evaluations have been ratcheting up over the past few years, as all boards have generally implemented the NYSE requirements in this area, notes TK Kerstetter, president of Corporate Board Member. "Those boards that conduct their board evaluation seriously, versus looking at it as just a compliance task of their listing requirements, have found it to be a very valuable tool."
Adds Bromilow, "The fact that six in 10 boards took action after an evaluation is evidence that this scrutiny of their own actions is necessary. Companies need to take the process seriously. While it's important for organizations to conduct evaluations on a regular basis, they face real risk if they identify changes needed but don't make those changes."
Other notable trends of this year's survey include:
-- Sixty-nine percent of respondents say they find their executive
sessions to be very useful to the board and believe the CEO
clearly understands their value; while 22 percent find them useful
to the board but are unsure whether the CEO appreciates them. Seven
percent say they are not particularly valuable to the board, while
1 percent say they are not valuable and have actually strained the
CEO/board relationship.
-- Boards are not yet ready to fully embrace the Internet. Fifty-seven
percent of directors are not ready to hold board meetings online.
And 72 percent say their board does not have a secure Internet
location where they can access documents; of those, 56 percent say
they do not even want one.
-- Directors are not seeking more control over the board agenda; 90
percent say they're satisfied with the control they currently wield
over what is scheduled for their board meetings.
-- More than half the respondents (51 percent) say institutional
investors influence their board the most, while 26 percent selected
analysts, 15 percent report that ISS and rating agencies influence
the board, and the remaining say it is the plaintiffs' bar and
activist hedge funds (4 percent and 3 percent, respectively).
-- Most directors are either "not at all concerned" (41 percent) or
only "somewhat concerned" (40 percent) about the impact of hedge
funds on their company. But 29 percent are "concerned" and 46
percent are "somewhat concerned" about the impact of hedge funds
on capital markets more broadly.
-- Fifty percent of respondents report that their board is "very
effective" in standing up to management, while 38 percent claim
they are "effective" and the remaining 11 percent say they are
"somewhat effective" in standing up to management.
-- Six out of ten boards (60 percent) would like to see their board
spend more time discussing the competition.
-- China is the most discussed emerging market by boards (according
to 52 percent of respondents), followed by India (35 percent) and
Brazil (21 percent). Twenty-two percent had traveled to China in
the past year. However, more than half (52 percent) report that
their companies do not compete or significantly invest in Chinese
companies, or outsource or sell to China.
"Boards are beginning to realize the importance of focusing on the world outside of the United States," said Bromilow. "As one of the most promising and influential economic markets, China is surely worthy of special attention."
The fifth annual survey measures the opinions of over 1,300 directors serving on the boards of the top 2,000 publicly traded companies listed on the New York Stock Exchange, NASDAQ Stock Market and the American Stock Exchange. The 2006 survey findings are highlighted in Corporate Board Member's November/December "What Directors Think" issue. Additional findings and analysis will be published in a supplement mailing with the magazine's January/February issue.
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
About Corporate Board Member
Corporate Board Member is a leading information resource for senior officers and directors of publicly traded corporations, large private companies, and Global 1000 firms. The bimonthly publication provides readers with decision-making tools to deal with the corporate governance challenges confronting their boards. Corporate Board Member further extends its governance leadership through an online resource center, conferences, director training programs, roundtables, and timely research. The magazine maintains the most comprehensive, up-to-date database of directors and officers of publicly-traded companies listed with the New York Stock Exchange, NASDAQ Stock Market, and American Stock Exchange. Headquartered in Brentwood, Tennessee, with editorial offices in New York, Corporate Board Member is published by Board Member Inc. and is the sister publication of Bank Director magazine, a leading information resource for officers and directors of financial institutions. For more information, visit www.boardmember.com.