Silicon Valley companies have reshaped their corporate boards in the wake of the landmark Sarbanes-Oxley Act of 2002 and new stock market rules.
Silicon Valley companies have reshaped their corporate boards in the wakeof the landmark Sarbanes-Oxley Act of 2002 and new stock market rules,according to a survey released today as reported by The San Jose Mercury News.
Thesurvey reports that virtually all directors are independent outsiders and techcompanies are splitting the roles of chairman and CEO. Moreover, nearly halfhave officially appointed a lead director, according to an examination of 100tech companies by Spencer Stuart, an executive search firm that specializes in recruitingdirectors.
TheSarbanes-Oxley rules, implemented after the Enron fiasco, have beencontroversial in Silicon Valley. Noted venturecapitalist Tom Perkins–who is credited with exposing the spying scandal lastyear at Hewlett-Packard–has complained that many directors are fixated oncomplying with rules rather than guiding companies.
But JohnWare, senior director of Spencer Stuart’s Silicon Valley office in San Mateo, told thenewspaper that regulatory pressures have spurred companies to appoint directorswith more financial expertise, train them better, and weed out directors whowere sitting on too many boards to be effective.
Thefirm’s survey indicates that five years after Sarbanes-Oxley took effect,outsiders comprise 83 percent of directors of valley companies, up from 75percent in 2003. Ninety-seven percent of companies have a designated financialexpert on their audit committees, compared with 11 percent in 2003. And almosttwo-thirds of valley companies split the roles of chief executive and boardchairman, compared with 35 percent of Standard & Poor’s 500 companies.
“Silicon Valley is not a place for cronies,” Ware said.“It is a place to work, and it’s a place where boards are independent from theCEO. That was an evolution at some companies, and not necessarily easily done.”
