M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Wednesday, November 17, 2010

Board trends survey

The executive search firm Spencer Stuart recently released its annual study of the state of corporate governance among the S&P 500 (H/T BusinessWeek/Bloomberg). The 2010 Spencer Stuart study includes information on a host of issues including board size and composition, governance practices and processes and compensation.  

The study also includes a breakdown of comparative board data.  It's a great survey that worth downloading - so get it here.

The study is the 25th such study they've done, so they took advantage of the opportunity to compare corporate governance today with 25 years ago: 

We continue to see a trend toward governance practices favored by shareholders, even though these changes are not yet required by regulators. For example, 72% of boards now elect directors to one-year terms, up from 40% a decade ago. Majority voting is also becoming the norm: 71% of boards — up from 65% last year — require directors who fail to secure a majority vote to offer their resignation.

Assuming an average of nine independent directors, annual compensation for an S&P 500 board is nearly $2 million, or $215,000per director per year. This is up just 1% from last year. 57% of the typical director compensation package is paid in equity — 43% as stock grantsand 14% as options. Fewer boards are paying meeting fees (41%, down from 62% in 2005), but those that do are paying 18% more than theywere five years ago: an average of $2,186 per meeting.

The shift to declassified board structures continues to gather pace: the percentage of boards serving one-year terms has risen every year since 2005, when it stood at 51%. In the past year alone, it rose from 68% to 72%.  Over the past year, 30 additional boards adopted policies requiring directors who fail to secure a majority vote to offer their resignation. Currently, 71% of the S&P 500 have a majority voting/resignation policy in place, up from 65% in 2009 and 56% in 2008.

-bjmq

http://lawprofessors.typepad.com/mergers/2010/11/board_trends_survey.html

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