A 'snapshot in time' of Internet boards.

• Author: DAUM, JULIE HEMBROCK

Are dot-com boards really a breed apart from traditional boards? As this baseline survey shows, they clearly have distinguishing characteristics.

SPENCER STUART is certainly no stranger to the corporate governance scene. In business for some 42 years, we have recruited executives and directors for thousands of companies. But we, like everyone else, marvel at the new economy and the companies it comprises -- companies that have gone from nonexistent no more than a few years ago to now representing many billions of dollars of shareholder value.

What is particularly interesting from the viewpoint of observing governance trends is that we are there at the creation! Unlike our annual Spencer Stuart Board Index (SSBI) survey of S&P 500 companies -- most of which have been around for decades at least -- we can begin a survey of public Internet companies at ground zero. This give us a baseline against which to measure all future trends.

It will be interesting to observe the rise -- and fall, no doubt, of some -- of these companies two, three, five, and more years down the road. Since we are firm believers that good governance is a significant part of the equation leading to successful company performance, we plan to keep a close watch on emerging and evolving governance practices in this neophyte group.

But, for starters, this report provides a snapshot in time of the boards of these new public companies: their composition, structure, and practices.

* Internet Boards Are Much Leaner. Even at a quick glance, the boards of public Internet companies look distinctly different from their traditional, large-company counterparts. For one thing they are much smaller, with an average size of only 6-7 directors as opposed to 12 on the average S&P 500 board, according to our annual SSBI survey. In the rapidly changing universe of the Internet, small size may well be an asset when nimbleness and the ability to make critical decisions in the blink of an eye are key elements of success.

When one looks at the distribution in size among companies, it is interesting to note just how compact Internet boards really are: A third of the boards have five or fewer directors, and less than 10% have more than 10 directors, a category that would account for more than half of traditional boards.

* Youth Predominates Among Insiders: Perhaps one of the most striking aspects of Internet boards, compared with traditional boards, is the age of inside directors. For starters, an astonishing one-quarter are under 40, an age group that would barely even be represented on the S&P 500 boards we survey. And at the other end of the age spectrum, in the age 55 and over category -- a group into which the vast majority of insiders on traditional boards would fall -- we find only 6% of Internet board insiders.

* "Old-timers" Still Relatively Young: Compared to the generally youthful insiders on Internet boards, outsiders as a group are generally older, but only relatively speaking. The average age of...