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The 2009 Directors' Compensation and Board Practices Report
The Conference Board, March 2010, Pages: 207
In the last decade, boards of directors of U.S. public corporations have responded to new regulatory requirements and market pressures by strengthening their independence and expanding the scope of their fiduciary duties to oversee management. The analysis of director compensation and board structures in U.S.-based public companies in The 2009 Directors’ Compensation and Board Practices Report is based on proxy data through May 2009 from 2,436 companies and the results of a 2009 survey of corporate secretaries. This annual report is a complement to the annual Top Executive Compensation Report.
In the past year, the United States has experienced a historic change in the way its citizens view financial institutions, public corporations, and compensation design. Boards of directors, which set executive compensation and have been directly affected by this shift, are the focus of this report. In particular, the report concentrates on how board members in publicly traded U.S. companies are organized and compensated. This report uses two data sources and information about thousands of companies to provide background on a wide variety of important issues in the area.
In the last decade, boards of directors of U.S. public corporations have responded to new regulatory requirements and market pressures by strengthening their independence and expanding the scope of their fiduciary duties to include oversight of management. In particular, the Sarbanes-Oxley Act of 2002 and subsequent rules by the Securities and Exchange Commission (SEC) have brought changes to the composition of the corporate board and imposed new standards of integrity for the performance of its functions. Some organized investors—large public and private pension funds, as well as activist hedge funds have taken unprecedented steps to monitor the business direction of their portfolio companies; today, they urge boards to repeal bylaws on classification and depart from the default rule of plurality voting in directors’ elections. Finally, at the judiciary level, the August 2005 decision by the Delaware Court of Chancery, which was later upheld by the Delaware Supreme Court, underscored the importance of good faith in the performance of corporate functions and stated that directors are expected to fully understand current best practices and ensure that business decisions are made in light of widely recognized corporate governance standards.
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