Kenneth Daly, president and CEO of the National Association of Corporate Directors, delivered a progress report at the NACD’s annual corporate governance conference in Washington D.C. “Over the past year I have witnessed a director community determined to focus on the issues that matter,” said Daly. “Now directors must demonstrate marked action, exploring new ways to strengthen corporate governance.”
According to Reuters, Daly recalled the NACD’s 2009 Public Company Governance Survey, an inventory of Fortune 500 actions, and NACD member participation, including its efforts to strengthen corporate governance.
An inventory of board actions found:
- NACD’s 2009 Public Company Governance Survey of 632 found that directors are focusing on issues more critical to recovery: strategic planning, risk oversight, financial oversight and corporate performance, and that they are responding to shareholder concerns.
- Nearly 50 percent of boards separate the positions of board chair and CEO, continuing that growth trend. When asked what board leadership structure they prefer, 63 percent say they prefer a structure where the CEO and Non Executive Chair were separate.
- Declassified boards are now the norm in large cap public companies, with 72.2 percent conducting annual elections and only 27.8 percent with staggered terms. There is still a strong shareholder desire to declassify boards.
- The use of director evaluations specifically to replace and renew board membership is on the rise is the most prevalent method of director replacement. All methods saw an increase this year, indicating that directors consider board composition critical in this environment.
- A separate poll of 90 Fortune 500 directors highlighted that the majority of boards have stepped up self-assessment measures to ensure efficient and effective performance.
“Many corporate boards have recognized the critical issues and adjusted their practices to perform in these unprecedented times, but this inventory of activity tells us that our work has only begun and more must be done,” said Daly. “Directors must continue taking the necessary steps to restore public and investor confidence, an important ingredient of economic recovery.”
Nearly 3,000 individuals have downloaded the NACD’s Key Agreed Principles as part of efforts to strengthen corporate governance.