The 2007 Director Stock Ownership Guidelines Report indicates that shareholder pressure for improved alignment of director-shareholder interests has led to increased use of director stock-ownership guidelines and holding requirements. The trend is likely to have continued in 2007 and into 2008, as those pressures have hardly abated. Better transparency in disclosure of corporate governance has generated a heap of new information on the prevalence and design of stock-ownership policies.

Among other key findings, the report reveals a 4.1-percent increase of the prevalence of ownership guidelines (as opposed to a set policy) at Fortune 250 companies, from 68.5 percent in 2005 to 72.6 percent in 2006. The presence of holding requirements at those companies also increased from 12.6 percent in 2005 to 14.9 percent in 2006.

Companies are also changing the way they measure ownership targets. In 2006, 59.4 percent of director stock ownership guidelines defined ownership targets as a multiple of annual retainer. In 2005, 62.0 percent of companies used this model. In both 2005 and

2006, the second most common ownership guideline design set ownership targets as a fixed number of shares. However, the prevalence of polices with targets set as a number of shares declined from 26.4 percent in 2005 to 25.7 percent in 2006.

Meanwhile, new disclosure rules set by the Securities and Exchange Commission have created new information surrounding key practices related to stock-ownership polices, the report finds. In 2006, information regarding non-compliance penalties, compliance status, compliance rewards, hardship provisions, and restrictions on hedging became available for the first time on a broad spectrum.