Boards: independent directors seen more independent.
Author | Marshall, Jeffrey |
Position | BusinessBRIEFS |
Directors are exerting more influence in the boardroom and have greater independence from management, according to a recent survey conducted by Mercer Delta Consulting, in conjunction with The Center for Effective Organizations at the University of Southern California's Marshall School of Business.
The study found that of the directors surveyed:
* 93 percent felt their board was independent of management "to a great" or "very great" extent;
* 95 percent said that board members voice opinions that conflict with the CEO's view;
* 73 percent said CEOs have less control over their boards "to some extent" or to a "great or very great extent;"
* 92 percent indicated that they had influence over the meeting agenda
The findings are based on responses from 221 directors of Fortune 1000 companies in the U.S. with average revenues of $9.9 billion.
Following the governance reforms initiated in 2002, boardrooms have been undergoing major changes. Beverly Behan, a partner in Mercer Delta Consulting's corporate governance practice, comments that "boards historically were quite 'ritualistic,' and not as effective as they're starting to become." Such boards, comprised of friends of an "imperial CEO," are what Behan refers to as "Jurassic Park," since, she says, they are dying out.
Mercer Delta research slots boards into five categories, each with certain characteristics:
1 The Passive Board functions at the discretion of the CEO; limited activity and board participation; limited accountability; the board ratifies management preferences.
2 The Certifying Board certifies to share-holders that the CEO is doing what the board expects, that management is capable of taking corrective action when needed; emphasizes outside/independent directors and meets independently without the CEO; establishes an orderly success process; stays informed of current performance, designates external...
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