MINNEAPOLIS, Jan. 4 /PRNewswire/ -- According to Spencer Stuart's sixth annual Minnesota Board Index, active chairmen, presidents, chief executive officers and chief operating officers are declining as a source of new independent directors for Minnesota's 30 largest companies. The study found that 43 percent of new directors of these companies were active C-level executives, compared to last year when more than half of new directors held these positions. The experience of Minnesota boards follows a national trend. Active senior-level executives accounted for only 32 percent of new directors recruited by S&P 500 boards. By comparison, more than half of new directors held these positions five years ago. "Given the demands of board service today -- including the increased time commitment, the additional scrutiny of boards and ongoing corporate governance requirements stemming from the Sarbanes-Oxley Act -- it's not surprising that it is now much harder to recruit C-level executives to a board," said Susan Boren, head of Spencer Stuart's Minneapolis/St. Paul office. "As active chairmen, chief executive officers, presidents and chief operating officers are less able and less willing to accept outside directorships, boards have turned to new prospects, such as retired or up-and-coming executives." Of the 23 new directors appointed by Minnesota's largest public companies in the past year, one was a minority and two were women. Minorities represent 10 percent of all board seats, although there is a considerable range among boards. Target Corporation and General Mills have approximately 33 percent minority representation, while nine boards have no minority directors. The average representation of women on Minnesota boards is 16 percent, down slightly from 17 percent last year, but ahead of 14 percent in 2000. Among S&P 500 companies, the average female representation is 15 percent. "While this year's group of directors lacks the diversity of past years, the overall trend lines are still positive," Boren said. Among other findings from the survey: -- Minnesota boards are more likely than in the past to separate the chairman and CEO roles. Eleven companies, or 37 percent of the 30 companies tracked in the index, separate the chairman and CEO roles, compared with eight companies, or 27 percent, in 2002. Of the 11 companies with separate CEOs and chairmen, four have non-executive chairs. -- Turnover in the chairman role has reached an all-time high. It is expected that nearly one-third of the boards in the study will name a new chairman by year-end. Chairmen already have departed from six companies during the first half of 2005, and two additional chairmen have announced they will retire by the end of the calendar year. Two other chairmen will retire as soon as their successors are named. -- Minnesota boards have on average six meetings annually. The number of meetings ranges by board from four to 11. -- Sixty-seven percent of companies elect directors to three-year terms; 30 percent to one-year terms; and one company to two-year terms. -- Twelve of the Minnesota companies included in the index have increased the annual retainer paid to board members since last year. The average increase among these companies was $13,700. Overall, the average director retainer increased 11 percent to $44,100, compared to $56,549 for S&P 500 boards. Minnesota board retainers have increased 48 percent since 2002. -- Seven boards began providing an annual retainer to the audit committee chair this year, while four boards increased the audit committee chair retainer during the past year. The average annual retainer provided to audit committee chairs by Minnesota's top boards is $13,000. -- Ninety percent of the boards include a stock component as part of director compensation and 66 percent pay attendance fees for meetings, down from 77 percent in 2002. -- The average board size is 10.3 and the average age is 59. Of the 23 new directors, 14 were from out of state and nine were from Minnesota. About Spencer Stuart Spencer Stuart is the foremost privately held, global executive search firm, spanning over 50 offices in 25 countries. Since 1956, Spencer Stuart has been providing select clients with a range of human capital solutions, including senior-level executive search, board director appointments and strategic leadership services. The firm conducts nearly 4,000 assignments each year, partnering effectively with clients ranging from the Fortune 500, to mid-cap, to emerging growth companies across a broad range of industries and sectors.
SOURCE Spencer Stuart