NEW YORK, Oct. 17, 2005 (PRIMEZONE) -- Despite corporate reform legislation, 74 percent of boards say that the CEO is still primarily responsible for setting the agenda for board meetings, according to the "What Directors Think" study conducted by PricewaterhouseCoopers LLP and Corporate Board Member magazine. Further, 10 percent say that the CEO is responsible for establishing meeting agendas for the audit, compensation, and governance/nominating committees -- which New York Stock Exchange listing standards mandate be comprised of only outside, independent directors.
"Not enough has changed in the boardroom and that is surprising, given all that Sarbanes-Oxley was trying to accomplish," said Herb Schulken, a partner with PricewaterhouseCoopers and U.S. leader of its Corporate Governance group. "Not enough people are getting the message -- and boards are not taking charge of their own agendas."
In this new world of board independence, the survey shows that boards aren't taking control over their own business. Almost half (47 percent) of respondents believe board leadership should emanate from the CEO versus a non-executive chairman or lead director.
Management succession is another issue that boards haven't yet been able to wrestle to the ground. Almost half of the boards surveyed (47 percent) said they were not satisfied with their management succession planning efforts. Yet, of those, 66 percent do not have the topic on their regular agenda and 26 percent said they have chosen not to address the issue because their CEO was uncomfortable with the topic.
"Succession planning is one of the most important areas of responsibility a board has," said TK Kerstetter, president of Corporate Board Member. "Finding the right CEO and managing risk are the two most important things boards should do. Yet this research indicates these are the two things boards believe they are least effective in doing," Kerstetter said.
Other key findings of the survey include:
- Recent news coverage of directors' personal liability for corporate downfalls has made directors more cautious but doesn't appear to be scaring them away from the boardroom. When asked about the proposed WorldCom and Enron personal settlement payments by some of those companies' corporate directors, 89 percent said they were very concerned or somewhat concerned, and two-thirds (66 percent) said they will conduct expanded due diligence before accepting any additional board appointments. However, while 73 percent of respondents said they believe their risk as a director has increased over the last 12 months, only 1 percent said they would resign all of their board seats as soon as it is practical.
"The good thing here," Mr. Schulken said, "is that they didn't over-react to these situations. Directors, by and large, are not leaving board service because of liability concerns. If that had happened, it would not have been a good result for boards or the capital markets."
- In this era of catastrophes, both natural and manmade, boards need to be more involved in risk management. More than half (51 percent) of those surveyed said they do not have an action plan in place if their company faced a major crisis, and another 8 percent were not sure.
"If we are to move into an era of improved corporate governance as anticipated under the three-plus-year-old Sarbanes-Oxley legislation, directors need to step up to the plate," Mr. Schulken said. "Directors need to realize they are in charge -- and that they need to start sounding like the boss."
The fourth annual survey measures the opinions of 1,103 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 2005 survey findings are highlighted in Corporate Board Member's November/December "What Directors Think" issue. The complete findings 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 work collaboratively using connected thinking to develop fresh perspectives and practical advice.
Unless otherwise indicated, "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited.
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 conferences, director training programs, an online resource center, and timely research. The magazine maintains the most comprehensive, up-to-date database of directors and officers serving on boards 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 .