Number of Independent Directors Up, SOX Costs Down, Say CEOs

The fifth annual survey of corporate governance practices conducted by the Business Roundtable found an increase in the number of independent directors serving on corporate boards, a significant rise in the number of companies that have adopted majority voting for directors, and a belief that spending to comply with the Sarbanes-Oxley Act is declining.

            “The spotlight on governance reform in Corporate America is well placed and speaks to the accountability corporations share in creating long-term value for stakeholders," said Anne M. Mulcahy, chairman and CEO of Xerox Corp. and chairman of Business Roundtable Corporate Governance Task Force.  “The results from this CEO survey demonstrate the importance of governance in leading a successful company through independent boards, performance-based compensation, and smart business practices that align with the influential role Corporate America plays in our world today.”

 “The spotlight on governance reform in Corporate America is well placed and speaks to the accountability corporations share in creating long-term value for stakeholders," --Anne M. Mulcahy, Xerox

            This year's survey included some new questions that focus on key issues of governance reform, including:

•             Board committees:  97 percent of audit committees, 92 percent of compensation committees, and 68 percent of nominating/governance committees meet in executive session each year.  Audit committees meet in executive session the most, with 85 percent meeting in executive session at every meeting.
 
•             CEOs serving on other boards:  75 percent of CEOs serve on no more than one other public company board. Nearly half, 48 percent, of CEOs serve on only one other public company board while 27 percent of CEOs do not serve on any other public company boards.
 
•             Shareholder communications:  Consistent with evolving practices and greater dialogue between boards and shareholders, 38 percent of companies responded that board members have met with shareholders in the last year.
 
•             Sarbanes-Oxley:  About 50 pecent of companies expect costs to decrease moderately in light of the SEC's interpretive guidance and the PCAOB's Auditing Standard No. 5; 31 percent expect costs to remain about the same, and only 2 percent expect an increase.